The Exchange Gains and Losses (Bringing into Account Gains or Losses) Regulations 2002

Cases where there is no disposal of the asset by virtue of section 116(10) of the 1992 Act

9.—(1) This regulation applies in the circumstances prescribed by paragraph (2) below.

(2) The circumstances prescribed by this paragraph are where the circumstances prescribed by regulation 3(2) would exist but for there being no disposal of the asset for the purposes of the 1992 Act by virtue of section 116(10) of that Act (“section 116(10)”).

(3) Where this regulation applies, the amount which, but for section 116(10), would be brought into account under regulation 4(1) as a chargeable gain or allowable loss shall be found and paragraph (4) below shall apply.

(4) Where this paragraph applies—

(a) if the amount found under paragraph (3) above would be brought into account as a chargeable gain, the market value of the asset shall, for the purposes of paragraph (a) of section 116(10), be increased by an amount equal to that amount;

(b) if the amount found under paragraph (3) above would be brought into account as an allowable loss—

(i) the market value of the asset shall, for the purposes of paragraph (a) of section 116(10), be reduced by an amount equal to that amount; and

(ii) if that amount exceeds the amount of the market value, an allowable loss equal in amount to the excess shall be treated as accruing on the subsequent disposal of the new asset (within the meaning of section 116(4) of the 1992 Act).