InterpretationU.K.

2.—(1) In these Regulations—

F1...

[F2“CTA 2009” means the Corporation Tax Act 2009;

“CTA 2010 means the Corporation Tax Act 2010;]

[F3“deferred shares” has the same meaning as in the Building Societies Act 1986;]

“derivative contract” has the same meaning as in [F4Part 7 of CTA 2009];

[F5“exchange gain or loss” has the same meaning as in [F6section 475 of CTA 2009];]

F7...

[F8“fair value profit or loss” means the profit or loss brought into account in relation to a derivative contract or an asset or liability representing a loan relationship where for the period in question—

(a)

the derivative contract or asset or liability representing a loan relationship is measured at fair value, or

(b)

the derivative contract or asset or liability representing a loan relationship is a hedged item in a designated fair value hedge and the carrying value of the hedged item is adjusted for changes in fair value attributable to the hedged risk;]

[F9“loan relationship” has the same meaning as in [F10section 302 of CTA 2009];]

[F9[F11a section 614 or 615 credit or debit]” means the credit or debit to be brought into account in accordance with [F12section 614 or 615 of CTA 2009];]

[F9“a prior period adjustment credit or debit” means so much of any credit or debit as represents a prior period adjustment taken into account by virtue of [F13section 597(1)(b) of CTA 2009] as a result of a change of accounting basis;]

[F14“regulatory capital security” has the meaning given in regulation 2 of the Taxation of Regulatory Capital Securities Regulations 2013;]

“underlying subject matter” has the same meaning as in [F15Part 7 of CTA 2009].

(2) In these Regulations—

“for accounting purposes” means for the purposes of accounts drawn up in accordance with generally accepted accounting practice;

“generally accepted accounting practice” has the meaning given in [F16section 1127 of CTA 2010]; and

“amortised cost”[F17, consolidated accounts], “designated”, “effective hedge”, “effective interest method”, [F18“fair value hedge”,] “firm commitment”, “forecast transaction”, “foreign operation” [F19, fair value, items of other comprehensive income] and “net investment in a foreign operation” have the same meaning as for accounting purposes.

(3) In these Regulations any reference to an asset which is a ship or aircraft includes a reference to a contract—

(a)to which section 67 of the Capital Allowances Act 2001(1) applies; and

(b)which relates to plant or machinery which is a ship or aircraft.

[F20(3A) For the purposes of these Regulations, a liability representing a loan relationship or a derivative contract is treated as matched with shares, ships or aircraft from the date that, and to the extent that, either condition 1 or 2 of regulation 3(3) or 4(3) are satisfied.]

(4) In these Regulations—

(a)any reference to a hedging instrument includes a reference to part of an instrument; and

(b)any reference to a hedged item includes a reference to part of a hedged item.

(5) For the purposes of these Regulations, a company has a hedging relationship between a derivative contract or a liability representing a loan relationship on the one hand (“the hedging instrument”) and an asset, liability, receipt or expense on the other (“the hedged item”) if and to the extent that—

(a)the hedging instrument and the hedged item are designated by the company as a hedge; or

(b)in any other case the hedging instrument is intended to act as a hedge of—

(i)the exposure to changes in fair value of a hedged item which is a recognised asset or liability or an unrecognised firm commitment or an identified portion of such an asset, liability or commitment that is attributable to a particular risk and could affect profit or loss of the company;

(ii)the exposure to variability in cash flows that is attributable to a particular risk associated with a hedged item that is a recognised asset or liability or a forecast transaction and could affect profit or loss of the company; or

(iii)a net investment in a foreign operation of the company.

[F21(6) For the purposes of regulations 3 to 5, where an asset referred to is shares in a company, the asset comprises all the shares held in that company whenever acquired.]

Textual Amendments

F1Words in reg. 2(1) omitted (1.1.2014 with effect in accordance with reg. 1(2)(3) of the amending S.I.) by virtue of The Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209), regs. 1(1), 10(2)(a)

F14Words in reg. 2(1) inserted (1.1.2014 with effect in accordance with reg. 1(2)(3) of the amending S.I.) by The Taxation of Regulatory Capital Securities Regulations 2013 (S.I. 2013/3209), regs. 1(1), 10(2)(b)

Modifications etc. (not altering text)

C1Reg. 2(5) applied (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by 2010 c. 8, s. 421(3) (as inserted by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1 (with Sch. 5 paras. 27, 32-34))

Commencement Information

I1Reg. 2 in force at 1.1.2005, see reg. 1(1)