Corporation Tax Act 2009

Adjustments on change of accounting policy U.K.

613 Introduction to sections 614 and 615 U.K.

(1) Sections 614 and 615 (adjustments on change of accounting policy) apply if—

(a) there is a change of accounting policy in drawing up a company's accounts from one period of account to the next, and

(b) the accounting policy in each of those periods accords with the law and practice applicable in relation to that period.

(2) In this section and those sections—

(a) the first of those periods of account is referred to as “the earlier period”, and

(b) the next is referred to as “the later period”.

(3) Sections 614 and 615 apply, in particular, if—

(a) the company prepares accounts for the earlier period in accordance with UK generally accepted accounting practice and for the later period in accordance with international accounting standards, or

(b) the company prepares accounts for the earlier period in accordance with international accounting standards and for the later period in accordance with UK generally accepted accounting practice.

(4) If an election is made under section 416, this section and sections 614 and 615 apply as if there were a change of accounting policy consisting of the company treating the assets referred to in section 416(1)(c) as mentioned in section 585(1) as from the date the election has effect.

614 Change of accounting policy involving change of value U.K.

(1) If there is an increase in the carrying value of a derivative contract of the company between—

(a) the end of the earlier period, and

(b) the beginning of the later period,

a credit of an amount equal to the increase must be brought into account in accordance with this Part for the later period.

(2) If there is a decrease in the carrying value of such a derivative contract between—

(a) the end of the earlier period, and

(b) the beginning of the later period,

a debit of an amount equal to the decrease must be brought into account in accordance with this Part for the later period.

(3) This section does not apply so far as such a credit or debit as is mentioned in this section falls to be brought into account apart from this section.

615 Change of accounting policy after ceasing to be party to derivative contract U.K.

(1) This section applies if—

(a) the company has ceased to be a party to a derivative contract in an accounting period (“the cessation period”),

(b) section 608 (credits and debits to be brought into account in respect of profits and losses arising in the cessation period) applied to the cessation, and

(c) there is a difference between the amount outstanding in respect of the derivative contract (see subsection (5))—

(i) at the end of the earlier period, and

(ii) at the beginning of the later period.

(2) If that amount has increased, a credit of an amount equal to the increase must be brought into account in accordance with this Part for the later period.

(3) If that amount has decreased, a debit of an amount equal to the decrease must be brought into account in accordance with this Part for the later period.

(4) Subsections (2) and (3) do not apply so far as the credit or debit falls to be brought into account apart from this section.

(5) In subsection (1) “the amount outstanding in respect of the derivative contract” means so much of the recognised deferred income or recognised deferred loss from the derivative contract as has not been represented by credits or debits brought into account in accordance with this Part in respect of the contract.

(6) In subsection (5)—

• “recognised deferred income”, in relation to a derivative contract, means the amount recognised in the company's balance sheet in accordance with generally accepted accounting practice as deferred income in respect of the profits which arose from the contract or a related transaction in the cessation period, and

• “recognised deferred loss”, in relation to a derivative contract, means the amount so recognised as deferred loss in respect of the losses which so arose.