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22(1)In Schedule 26 to FA 2002 (derivative contracts) paragraph 28 (transactions within groups) is amended as follows.
(2)For sub-paragraph (3) (the credits and debits to be brought into account) substitute—
“(3)For the purpose of determining the credits and debits to be brought into account for the purposes of this Schedule in respect of the derivative contract—
(a)for the accounting period in which the transaction or, as the case may be, the first of the series of transactions takes place, the transferor company shall be treated as having entered into that transaction for a consideration equal to the notional carrying value of the contract; and
(b)for any accounting period in which it is a party to the contract, the transferee company shall be treated as if it had acquired the contract for a consideration equal to its notional carrying value.
For the purposes of this sub-paragraph the notional carrying value is the amount that would have been the carrying value of the derivative contract in the accounts of the transferor company if a period of account had ended immediately before the date when the company ceased to be party to the contract.”.
(3)In sub-paragraph (5), after “In this paragraph” insert the following definition—
““carrying value” has the same meaning as it has for the purposes of paragraph 50A;”.
(4)Where the period of account mentioned in the second sentence of the sub-paragraph (3) substituted by sub-paragraph (2) begins before 1st January 2005, “carrying value” shall be construed as if the period had begun on or after that date.
(5)The amendments made by this paragraph have effect in any case where the relevant transaction is on or after 16th March 2005.
(6)In this paragraph “the relevant transaction” means—
(a)the related transaction mentioned in sub-paragraph (2)(a) of paragraph 28 of Schedule 26 to FA 2002,
(b)the first of the series of transactions mentioned in sub-paragraph (2)(b) of that paragraph, or
(c)the transfer mentioned in sub-paragraph (2)(c) or (2)(d) of that paragraph,
by virtue of which that paragraph applies or would apply apart from paragraph 30 of that Schedule.
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