Finance Act 1994

Other basic definitions

153 Qualifying payments

(1) Subject to subsections (2) to (5) below, in this Chapter “qualifying payment” means—

(a) in relation to a qualifying contract which is an interest rate contract, a payment falling within section 149(2), (3) or (4) above;

(b) in relation to a qualifying contract which is a currency contract, a payment falling within subsection (3) or (9) of section 150 above;

(c) in relation to a qualifying contract which is a currency option, a payment falling within subsection (9) of that section; and

(d) in relation to any qualifying contract, a payment falling within section 151 above.

(2) In this Chapter “qualifying payment” includes, in relation to a qualifying contract—

(a) a payment which, if it were a payment under the contract, would be a payment falling within section 151 above; and

(b) a payment for securing the acquisition or disposal of the contract.

(3) Where a qualifying company closes out a qualifying contract which is an interest rate or currency contract by entering into another contract with obligations which are reciprocal to those of the qualifying contract—

(a) any payment received by the company in consideration of its entering into the reciprocal contract, or paid by the company in consideration of another person’s entering into that contract, is for the purposes of this Chapter a qualifying payment in relation to the qualifying contract; and

(b) all other payments under the reciprocal contract, and all subsequent payments under the qualifying contract, shall be ignored for all purposes of the Tax Acts.

(4) Subsection (5) below applies where, in the case of a qualifying contract which is a currency contract, there is a difference between—

(a) the local currency equivalent, at the time immediately after the qualifying company becomes entitled to rights and subject to duties under the contract, of the amount of the first currency (the first currency equivalent), and

(b) the local currency equivalent, at that time, of the amount of the second currency (the second currency equivalent).

(5) The amount of the difference shall be treated for the purposes of this Chapter—

(a) where the first currency equivalent exceeds the second currency equivalent, as a qualifying payment received by the qualifying company at the time specified in the contract for the purposes of section 150(2) above, and

(b) where the first currency equivalent is less than the second currency equivalent, as a qualifying payment made by the qualifying company at that time.

154 Qualifying companies

(1) Subject to subsections (2) and (3) below, any company is a qualifying company for the purposes of this Chapter.

(2) Where a unit trust scheme is an authorised unit trust as respects an accounting period the trustees (who are deemed to be a company for certain purposes by section 468(1) of the Taxes Act 1988) are not, as regards that period, a qualifying company for the purposes of this Chapter.

(3) A company which is approved for the purposes of section 842 of the Taxes Act 1988 (investment trusts) for an accounting period is not, as regards that period, a qualifying company for the purposes of this Chapter so far as it relates to currency contracts and options.

(4) In this section—

• “authorised unit trust” has the same meaning as in section 468 of the Taxes Act 1988;

• “unit trust scheme” has the same meaning as in section 469 of that Act.