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

Amendment of regulation 3C

5.—(1) Regulation 3C (prescribed debits and credits not brought into account)(1) is amended as follows.

(2) In paragraph (2)—

(a) after sub-paragraph (c) insert—

“(ca) debits and credits in relation to a derivative contract the underlying subject matter of which consists wholly or partly of a currency, to the extent that—

(i) those debits and credits represent the reversal of exchange gains and losses arising to the company in an accounting period before the later period, and

(ii) those exchange gains and losses have not been brought into account for the purposes of corporation tax by virtue of paragraph 16(3) of Schedule 26 to Finance Act 2002(2), regulations 4 to 11 of the Exchange Gains and Losses (Alternative Method of Calculation of Gain or Loss) Regulations 1994(3) or regulation 4 of the Disregard Regulations(4);”; and

(b) after sub-paragraph (d) insert—

“(da) debits and credits in relation to a loan relationship which is denominated in a currency which is not, or was not, the company’s functional currency, to the extent that—

(i) those debits and credits represent the reversal of exchange gains and losses arising to the company in an accounting period before the later period, and

(ii) those exchange gains and losses have not been brought into account for the purposes of corporation tax by virtue of section 84A(3) of the Finance Act 1996, regulations 4 to 11 of the Exchange Gains and Losses (Alternative Method of Calculation of Gain or Loss) Regulations 1994 or regulation 3 of the Disregard Regulations(5);”.

(3) In paragraph (4) insert at the end—

““underlying subject matter” has the meaning given in paragraph 11 of Schedule 26 to the Finance Act 2002(6).”.

(1)

Regulation 3C was inserted by S.I. 2005/3383 and amended by S.I. 2006/3238 and 2007/950.

(2)

Paragraph 16(3) was substituted by paragraph 48 of Schedule 10 to the Finance Act 2004.

(3)

S.I. 1994/3227, relevantly amended by S.I. 1996/1347, 2000/3315 and 2002/1969.

(4)

S.I. 2004/3256; regulation 4 was amended by S.I. 2005/2012, 2005/3374 and 2007/3431. “Disregard Regulations” is defined in regulation 3C(4).

(5)

Regulation 3 was amended by S.I. 2005/2012, 2005/3374 and 2007/3431.

(6)

Paragraph 11 was amended by S.I. 2005/2082 and 2005/2201.