The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 which allow certain profits and losses from loan relationships and derivative contracts to be left out of account, to be brought into account in a different way or to be brought into account at a later date.

Regulation 1 provides for citation, commencement and effect.

Regulation 2 introduces the amendments.

Regulation 3 amends regulation 3 (exchange gains or losses arising from liabilities or assets hedging shares etc) to remove the exclusion of non-lending money debts from the scope of the Regulations.

Regulation 4 amends regulation 4A (relevant value) to allow elections to be made and revoked under that regulation at any time.

Regulation 5 makes a consequential amendment to regulation 4C (review period).

Regulation 6 substitutes regulation 6 and inserts new regulations 6A and 6B. The substituted regulation 6 sets out the cases where regulations 7, 8 and 9 apply and permits an election to be made to apply those regulations. New regulation 6A makes provisions in relation to the election and new regulation 6B makes provision where a derivative contract in relation to which an election has been made is transferred to a group company.

Regulation 7 inserts a heading to regulation 9A and makes consequential amendments to that regulation.

Regulation 8 inserts definitions and updates the statutory references in the Regulations.

Regulation 9 makes transitional provisions to preserve the treatment of derivative contracts in relation to which regulations 7, 8 or 9 of the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 applied before the amendments made to the election provisions by these Regulations have effect.

A Tax Information and Impact Note covering this instrument was published on 7th August 2014 alongside draft legislation and is available on the GOV.UK website at www.gov.uk/government/collections/tax-information-and-impact-notes-tiins.