Regulations 3 and 4: supplementaryI15
1
Where in any accounting period—
a
a company holds more than one asset in relation to which there are amounts of exchange gains and losses falling within regulations 3 or 4; and
F5Rule 1
Liabilities and contracts are regarded as matched to the greatest possible extent with assets which are ships or aircraft.
Rule 2
Subject to Rule 1, liabilities and contracts are regarded as matched to the greatest possible extent with assets on the disposal of which a chargeable gain would accrue F6if the disposal were made on a date falling more than 12 months after the date of acquisition of the asset.
Rule 3
2
If—
a
part only of a liability falling within the third condition in regulation 3, or
b
part only of a contract falling within the third condition in regulation 4,
could reasonably be expected to eliminate or substantially reduce the economic risk of holding the asset which is attributable to fluctuations in exchange rates, the liability or contract is to be treated as being matched with a corresponding amount of value of an asset.
3
For the purposes of paragraph (1), a currency in which a liability is expressed or which is the underlying subject matter of a derivative contract, is to be treated, if it is not the case, as the same currency in which an asset is denominated if—
a
borrowing in that currency, or
b
the obligation to deliver that currency,
could reasonably be expected to eliminate or substantially reduce the economic risk of holding the asset, or part of the asset, which is attributable to fluctuations in exchange rates.
4
Where regulation 3 or section 84A(3) of the Finance Act 1996 applies to a company in an accounting period in relation to a liability representing a loan relationship there is prescribed, for the purposes of regulation 3 or section 84A(3A) of that Act, an exchange gain or loss treated by virtue of paragraph 6D(2) of Schedule 28AA to the Taxes Act 19887 as arising in that accounting period to another company in relation to the same loan relationship.