The Exchange Gains and Losses (Bringing into Account Gains or Losses) (Amendment) Regulations 2004

Amendments to the Exchange Gains and Losses (Bringing into Account Gains or Losses) Regulations 2002

6.—(1) Amend regulation 7 as follows.

(2) In both paragraphs (5) and (6) after “1st October 2002” insert “but before 1st January 2005”.

(3) After paragraph (5) insert—

“(5A) In respect of any time falling within an accounting period beginning on or after 1st January 2005—

(a) a liability is fully matched with an asset if—

(i) an amount representing the whole of an exchange gain or loss arising in relation to the liability is recognised in the company’s statement of recognised gains and losses or statement of changes in equity, and

(ii) the whole of an exchange gain or loss arising in relation to the asset is also so recognised, or

(iii) it is matched with that asset in accordance with regulation 3 or 4 of the Disregard Regulations; and

(b) a liability is partly matched with an asset if—

(i) an amount representing part of an exchange gain or loss arising in relation to the liability is recognised in the company’s statement of recognised gains and losses or statement of changes in equity, and

(ii) part of an exchange gain or loss arising in relation to the asset is also so recognised, or

(iii) an amount representing part of an exchange gain or loss arising in relation to the liability is matched with that asset in accordance with regulation 3 or 4 of the Disregard Regulations.”.

(4) In paragraph (7), in Rule 1 omit “(other than ones which fall within section 93 of the Finance Act 1996(1))”.

(5) For paragraph (8) substitute—

“(8) For the purposes of paragraph (6), the currency in which a liability is expressed is to be treated as the currency in which an asset is denominated if—

(a) borrowing in that currency, or

(b) the entering into a derivative contract whose underlying subject matter is that currency,

could reasonably be expected to eliminate or substantially reduce the economic risk of holding the asset which is attributable to fluctuations in exchange rates.”.

(1)

1996 c. 8. Repealed by paragraph 11 of Part 1 of Schedule 10 to the 2004 Act.