C1C3C2F1Part 10F1Corporate interest restriction
Pt. 10 excluded by 2010 c. 4, s. 937NA (as inserted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 7)
Pt. 10 excluded by 2010 c. 4, s. 938V(d) (as substituted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 9)
Pt. 10 excluded by 2010 c. 4, s. 938N(e) (as substituted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 8)
F1CHAPTER 7Group-interest and group-EBITDA
Treatment of derivative contracts in financial statements of worldwide group
421Derivative contracts subject to fair value accounting: interpretation
1
In section 420 “the relevant assumptions” means the following assumptions—
a
that all members of the group are within the charge to corporation tax;
b
that elections under regulation 6A of the Disregard Regulations have effect in relation to each derivative contract of each member of the group;
c
that paragraph (5) of regulation 7 of the Disregard Regulations is of no effect;
d
that where—
i
a member of the group (“member A”) holds a derivative contract,
ii
the group has a hedging relationship between that derivative contract (on the one hand), and an asset, liability, receipt or expense (on the other), and
iii
the asset, liability, receipt or expense is held, or is expected to be received or incurred, by a member of the group other than member A,
the asset, liability, receipt or expense is held, or is expected to be received or incurred, by member A;
e
that the financial statements of members of the group deal with derivative contracts and hedged items in the same way as they are dealt with in the group's financial statements.
2
For the purposes of subsection (1)(d) the group has a “hedging relationship” between a derivative contract (on the one hand) and an asset, liability, receipt or expense (on the other) if, were those things held, received or incurred by a single company, the company would have a hedging relationship between them.
3
Regulation 2(5) of the Disregard Regulations (hedging relationships of a company) applies for the purposes of this section.
4
For the purposes of section 420 and this section—
a
“the Disregard Regulations” means the Loan Relationship and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256);
b
the following are “relevant provisions” of the Disregard Regulations—
i
regulation 7 (fair value profits or losses arising from derivative contracts which are currency contracts);
ii
regulation 8 (profits or losses arising from derivative contracts which are commodity contracts or debt contracts);
iii
regulation 9 (profits or losses arising from derivative contracts which are interest rate contracts).
Pt. 10: the existing Pt. 10 renumbered as Pt. 11 (except for ss. 375, 376 which are repealed), the existing ss. 372-374, 377-382 renumbered as ss. 499-507 and a new Pt. 10 (ss. 372-498) inserted (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1, 10(1)(2)(a)(3) (with Sch. 5 paras. 27, 32-34)