Part 7Derivative contracts
Chapter 7Chargeable gains arising in relation to derivative contracts
Issuers of securities with embedded derivatives: deemed options
655Ceasing to be party to debtor relationship when deemed option not exercised
1
Subsection (2) applies if the company ceases to be a party to the debtor relationship mentioned in section 652(2) at a time when the option mentioned in section 652(3) has not been exercised.
2
The company is treated for the purposes of corporation tax on chargeable gains—
a
as having acquired an asset for consideration of an amount equal to Y, and
b
as having disposed of that asset for consideration of an amount equal to CV.
3
In this section—
“CV” has the same meaning as in section 654,
“Y” means—
- a
if the company ceases to be a party to the debtor relationship as a result of the redemption or repayment of the liability representing that relationship, the amount paid by the company, or
- b
otherwise, the consideration given by the company on its ceasing to be a party to that relationship,
in either case reduced (but not below nil) by the fair value of the host contract at the date on which it so ceases, and
- a
“the host contract” has the same meaning as in section 654.