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.