The Taxation of Regulatory Capital Securities Regulations 2013

Transitional provisions

11.—(1) This regulation applies for the purposes of corporation tax in relation to the first accounting period beginning, or treated as beginning, on or after 1st January 2014 in respect of a security—

(a) issued before that date,

(b) to which Part 5 of CTA 2009 applied in the accounting period ending, or treated as ending, on 31st December 2013, and

(c) which is a regulatory capital security for the purposes of these Regulations.

(2) In this regulation—

(a) an accounting period ending, or treated as ending, on 31st December 2013 is referred to as “the earlier period”, and

(b) an accounting period beginning, or treated as beginning, on 1st January 2014 is referred to as “the later period”.

(3) If there is an increase in the carrying value of a security which is an asset of the company between—

(a) the end of the earlier period, and

(b) the beginning of the later period,

a credit equal to the increase must be brought into account for the purposes of Part 5 of CTA 2009 in the later period.

(4) If there is an decrease in the carrying value of such a security between—

(a) the end of earlier period, and

(b) the beginning of the later period,

a debit equal to the decrease must be brought into account for the purposes of Part 5 of CTA 2009 in the later period.

(5) If there is an increase in the carrying value of a security which is a liability of the company between—

(a) the end of the earlier period, and

(b) the beginning of the later period,

a debit equal to the increase must be brought into account for the purposes of Part 5 of CTA 2009 in the later period.

(6) If there is an decrease in the carrying value of such a security between—

(a) the end of earlier period, and

(b) the beginning of the later period,

a credit equal to the decrease must be brought into account for the purposes of Part 5 of CTA 2009 in the later period.

(7) But this regulation does not apply so far as any debit or credit as is mentioned in this regulation falls to be brought into account apart from this regulation.

(8) For the purposes of this regulation, where in the earlier period, in accordance with generally accepted accounting practice, the rights and liabilities under a security have been treated as divided between a loan relationship and one or more derivative financial instruments or equity instruments, the reference to the carrying value of the security means the sum of the carrying values for each of those component instruments.

(9) For the purposes of this regulation, “carrying value” must be construed in accordance with section 317 (subject to regulation 3(3) in the later period) and section 702 of CTA 2009.