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Finance Act 2009, Cross Heading: Derivative contracts is up to date with all changes known to be in force on or before 04 September 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
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4U.K.Chapter 3 of Part 7 of CTA 2009 (derivative contracts: credits and debits to be brought into account) is amended as follows.
5U.K.For the heading before section 606 (exchange gains and losses) substitute— “ Exchange gains and losses ”.
6(1)Section 606 is amended as followsU.K.
(2)In subsection (3), for paragraph (a) (together with the “and” at the end) substitute—
“(a)condition A or B is met, and”.
(3)In subsection (4), for the words from “so much” to “currency as” substitute “an exchange gain or loss of a company so far as—
(a)condition A is met, and
(b)it”.
(4)After that subsection insert—
“(4A)Condition A is that the exchange gain or loss arises in relation to a derivative contract whose underlying subject matter consists wholly or partly of currency.
(4B)Condition B is that the exchange gain or loss arises as a result of the translation from one currency to another of the profit or loss of part of the company's business.
(4C)Subsection (4D) applies where—
(a)condition A is met, and
(b)the amount that is recognised in respect of the exchange gain or loss as mentioned in subsection (3)(b) (“the recognised gain or loss”) is not calculated by reference to spot rates of exchange.
(4D)Where this subsection applies—
(a)the recognised gain or loss is to be treated for the purposes of this Part as comprising two separate exchange gains or losses, namely—
(i)an exchange gain or loss calculated by reference to spot rates of exchange, and
(ii)a residual exchange gain or loss, and
(b)subsections (3) and (4) do not have effect in relation to the residual exchange gain or loss.”
(5)After subsection (4D) (inserted by sub-paragraph (4) above) insert—
“(4E)Subsections (3) and (4) do not have effect to disapply subsection (1) in the case of an exchange gain arising in an accounting period of a company so far as—
(a)the exchange gain arises in relation to a derivative contract whose underlying subject matter consists wholly or partly of currency,
(b)the derivative contract is part of arrangements that have a one-way exchange effect in relation to the company in the accounting period (see section 606A), and
(c)the arrangements cause the company or any other company to gain a tax advantage (other than a negligible tax advantage).”
F17U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Textual Amendments
F1Sch. 21 para. 7 omitted (with effect in accordance with Sch. 7 Pt. 6 to the amending Act) by virtue of Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 100
8U.K.Immediately before section 607 (pre-contract or abortive expenses) insert— “ Miscellaneous ”.
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