641Derivative contracts to be taxed on a chargeable gains basisU.K.
(1)This section applies to a derivative contract of a company for an accounting period if any of the provisions in subsection (2) applies to the derivative contract for the period.
(2)The provisions are—
(a)section 643 (contracts relating to land or certain tangible movable property),
(b)section 645 (creditor relationships: embedded derivatives which are options),
(c)section 648 (creditor relationships: embedded derivatives which are exactly tracking contracts for differences), and
(d)section 650 (property based total return swaps).
(3)For the purposes of corporation tax on chargeable gains—
(a)if C exceeds D, a chargeable gain equal to the amount of the excess is treated as accruing to the company in the accounting period,
(b)if D exceeds C, an allowable loss equal to the amount of the excess is treated as accruing to the company in the accounting period.
(4)“C” means the sum of the relevant credits for the accounting period in respect of the derivative contract.
(5)“D” means the sum of the relevant debits for the accounting period in respect of the derivative contract.
(6)For a case in which this section does not apply, see section 642.
(7)See also section 663 (carry back of net losses on derivative contracts to which this section applies).