Section 590: Disregard of subordinate or small value underlying subject matter
1575.This section provides that the parts of a relevant contract’s underlying subject matter that are subordinate or of small value are ignored in determining for the purposes of section 589 whether its underlying subject matter consists wholly of excluded property. It is based on paragraph 9 of Schedule 26 to FA 2002.
1576.A relevant contract may contain a number of minor elements in addition to its main purpose. For example, there may also be an option to settle the contract in one or more currencies by reference to a particular exchange rate or there may be some minor leeway as to the settlement date.
1577.Subsection (3) provides that any question of whether part of the underlying subject matter is “subordinate” or of “small value” is determined by reference to the time the company enters into or acquires the contract. But the section does not otherwise provide any definition of “subordinate” or “small value”. Paragraph CFM13120 of HMRC’s Corporate Finance Manual (and the examples in CFM13120a) provides guidance.
1578.See also section 593 which deals with the case of an option or future where the part of the underlying subject matter that is not excluded property is neither subordinate nor of small value.