SCHEDULES

SCHEDULE 7Loan relationships and derivative contracts

PART 6Commencement and transitional provisions

121Transitional adjustments relating to derivative contracts

1

If paragraph 120 applies in relation to a derivative contract of a company, then for each relevant accounting period a credit or debit of an amount equal to the transitional adjustment for the period must be brought into account for the purposes of Part 7 of CTA 2009 in the same way as a credit or debit which is brought into account in determining the company’s profit or loss for the period in accordance with generally accepted accounting practice.

2

The relevant accounting periods are—

a

the first accounting period of the company beginning on or after 1 January 2016, and

b

each subsequent accounting period all or part of which falls within the transitional years.

3

The transitional years are the 5 years beginning with the first day of the first accounting period of the company beginning on or after 1 January 2016.

4

The transitional adjustment for each relevant accounting period is calculated as follows.

5

Allocate a percentage of the overall transitional adjustment (determined under paragraph 120) to each of the 5 transitional years as follows—

1st year

40%

2nd year

25%

3rd year

15%

4th year

10%

5th year

10%

6

If a transitional year coincides with an accounting period, the transitional adjustment for the accounting period is the amount allocated to that year.

7

In any other case—

a

apportion the amount allocated to each transitional year between accounting periods according to the number of days in the transitional year which fall within each period, and

b

the transitional adjustment for an accounting period is the total of the amounts apportioned to that period.