(1)In section 473 of the Taxes Act 1988 (roll-over of securities held as circulating capital)—
(a)in the opening words of subsection (2), omit “, if the securities were not such as are mentioned in subsection (1)(b) above”;
(b)in subsection (2)(a), and in subsection (7), for “would result” substitute “ results ”; and
(c)in subsection (2)(b) for “would be” substitute “ is ”.
(2)After subsection (2) of that section insert—
“(2A)This section does not apply to securities in respect of which unrealised profits or losses, calculated by reference to the fair value of the securities at the end of a period of account, are taken into account in the period of account in which the transaction mentioned in subsection (2) above occurs.
(2B)Subsection (2A) above shall be disregarded in determining for the purposes of section 66 of the Finance Act 2002 (election to continue postponement of mark to market) whether an asset was held by a person on 1st January 2002.”.
(3)In section 81 of the Finance Act 1999 (c. 16) (acquisitions disregarded under insurance companies concession), at the end add—
“(13)If the relevant company changes from—
(a)not recognising a profit or loss on an asset until it is realised, to
(b)bringing assets into account in each period of account at a fair value,
then, in calculating the amount of any adjustment required under Schedule 22 to the Finance Act 2002 (calculation of adjustment on change of basis), the amount to be taken into account as the cost of the asset in relation to a period of account before the change is the cost of the previous acquisition.”.
(4)The provisions of this section come into force as follows—
(a)the amendments in subsections (1) and (2) apply in relation to periods of account ending on or after 1st August 2001;
(b)the amendment in subsection (3) applies wherever an adjustment falls to be made under Schedule 22 to the Finance Act 2002 (see Part 5 of that Schedule).