Finance (No. 2) Act 2017

Power to make elections under Disregard Regulations for pre-1 April 2020 derivative contracts

31 (1) A company which is a UK group company of a worldwide group on 1 April 2017 may elect for the Disregard Regulations to have effect as if—

(a) the company had made an election (“the disregard election”) under regulation 6A of those Regulations for the purposes of regulation 6(1)(a) of those Regulations,

(b) the disregard election applied to regulations 7, 8 and 9 of those Regulations, and

(c) the disregard election had effect in relation to derivative contracts entered into by the company before 1 April 2020.

(2) The election has effect for the calculation under Part 10 of TIOPA 2010 of—

(a) the tax-interest expense amounts and tax-interest income amounts of the company and any relevant transferee company, and

(b) the adjusted corporation tax earnings under section 406 of that Act of the company and any relevant transferee company.

(3) A company is a “relevant transferee company” if regulation 6B or 6C of the Disregard Regulations applies in relation to the company as the transferee mentioned in the regulation (on the assumption that an election has been made before the transfer under this paragraph).

(4) An election under this paragraph has effect only if every company which was a UK group company of the worldwide group on 1 April 2017 (other than one which was dormant on that date or at the time the election is made) also makes an election under this paragraph.

(5) An election under this paragraph—

(a) must be made before 1 April 2018, and

(b) is irrevocable.

(6) Section 457 of TIOPA 2010 is to apply in relation to debits resulting from an election under this paragraph.

(7) In this paragraph “the Disregard Regulations” means the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (S.I. 2004/3256).

(8) Expressions used in this paragraph and in Part 10 of TIOPA 2010 have the same meaning in this paragraph as they have in that Part.