Treatment of credits and debits on former chargeable assetU.K.
[F14D.(1)This paragraph applies if—
(a)a company is party to a plain vanilla contract which (not having been a derivative contract) became a derivative contract before 30th December 2006,
(b)the company disposes of the derivative contract by ceasing to be a party to it, and
(c)paragraphs 4A and 4B do not apply in relation to the contract.
(2)For the purposes of computing any chargeable gain accruing to the company on the disposal—
(a)paragraph 1(2) does not apply; and
(b)the sums allowable as a deduction under section 38(1)(a) of TCGA 1992 (acquisition costs) shall—
(i)if G exceeds L, be increased by the amount of that excess, and
(ii)if L exceeds G, be reduced by the amount of that excess.
(3)If the amount of the excess in sub-paragraph (2)(b)(ii) is greater than the amount of expenditure allowable under section 38(1)(a) of TCGA 1992, the amount of the excess that cannot be deducted from the expenditure shall, for the purpose mentioned in sub-paragraph (2), be added to the amount of the consideration for the disposal.
(4)In this paragraph—
G is the sum of the credits brought into account under paragraph 14(3) in respect of the derivative contract in each relevant accounting period, and
L is the sum of the debits brought into account under paragraph 14(3) in respect of the derivative contract in each relevant accounting period.
(5)For the purposes of sub-paragraph (4) a “relevant accounting period” is—
(a)the accounting period in which the disposal is made, or
(b)any previous accounting period.]
Textual Amendments
F1 Sch. 26 para. 4D substituted for Sch. 26 para. 4C (with effect in accordance with art. 1(2)(3) of the amending S.I.) by The Finance Act 2002, Schedule 26, (Parts 2 and 9) (Amendment) Order 2006 (S.I. 2006/3269), arts. 1, 7