The Loan Relationships and Derivative Contracts (Change of Accounting Practice) (Amendment) Regulations 2008

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271, as amended by S.I. 2005/3383, 2006/3238, 2007/950 and 2007/3432, “the principal Regulations”) which make provision for certain debits and credits not to be brought into account in the first accounting period of a company beginning on or after 1st January 2005, and for those debits and credits instead to be brought into account over a ten year period (beginning with the first period of account on or after 1st January 2006), or not to be brought into account for any period. These Regulations amend the principal Regulations to provide that debits and credits arising on a change of accounting policy which represent the reversal of foreign exchange gains or losses which were not taxed or relieved in earlier periods of account (as a result of the application of provisions matching those gains or losses to opposite gains or losses) are no longer to be brought into account.

Regulation 1 provides for citation, commencement and effect. Authority for the limited retrospective effect of these Regulations is given by paragraph 52(2) of Schedule 4 to the Finance Act 2005.

Regulation 2 introduces the amendments to the principal Regulations.

Regulation 3 amends regulation 2 of the principal Regulations (interpretation).

Regulation 4 amends regulation 3A of the principal Regulations (prescribed debits and credits brought into account over prescribed period). It deals with the case where debits and credits are currently being brought into account over a ten year period and provides that if those debits and credits would not be brought into account if the amendments made by regulation 5 (which extends the class of credits and debits which are not to be brought into account) had applied then, those debits and credits are not to be brought into account for any accounting period beginning on or after 1st January 2009, where the accounting period is within a period of account beginning on or after 1st January 2008. It also provides for a time based apportionment in relation to accounting periods which begin on or after 1st January 2008 and end after 31st December 2008.

Regulation 5 amends regulation 3C of the principal Regulations (prescribed debits and credits not brought into account) to extend the classes of specified debits and credits which are not to be brought into account in determining a company’s profit or loss for any period.

A full and final Impact Assessment has not been produced for this instrument as a negligible impact on the private or voluntary sectors is foreseen.