Part IIIncome Tax, Corporation Tax and Capital Gains Tax
Chapter IIExchange Gains and Losses
Interpretation: assets, liabilities and contracts
156Assets and liabilities: other matters
1
Each of the following questions shall be determined according to the facts of the case concerned—
a
whether a transaction (or series of transactions) involves the creation of one asset consisting of a right to settlement under a debt or a number of assets consisting of a number of such rights;
b
whether a transaction (or series of transactions) involves the creation of one liability consisting of a duty to settle under a debt or a number of liabilities consisting of a number of such duties;
c
whether a transaction (or series of transactions) involves the creation of both an asset (or assets) held and a liability (or liabilities) owed by the same company.
2
Subsection (3) below applies where—
a
a company, in drawing up its accounts, regards itself as becoming entitled or subject to an asset or liability at a particular time,
b
the company, in drawing up its accounts, regards itself as ceasing to be entitled or subject to the asset or liability at a later time,
c
at the time mentioned in paragraph (a) above it could reasonably be expected that the company would become entitled or subject to such an asset or liability,
d
the asset or liability does not in fact come into existence before the later time but (if it did) it would fall within section 153(1)(a) or (2)(a) above, and
e
the accounts are drawn up in accordance with normal accountancy practice.
3
The company shall be taken to—
a
become entitled or subject to such an asset or liability at the time it regards itself as becoming so entitled or subject, and
b
cease to be entitled or subject to such an asset or liability at the time it regards itself as ceasing to be so entitled or subject.
4
Where subsection (3) above applies, as regards any time beginning with the time mentioned in subsection (3)(a) and ending with the time mentioned in subsection (3)(b) the nominal amount of the debt shall be taken to be—
a
such amount as the company treats as the nominal amount in its accounts, or
b
such amount as it would so treat in accordance with normal accountancy practice (if that amount is different from the amount found under paragraph (a) above).