Textual Amendments
F1Pt. 13 Ch. 5F inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2)
(1)This section applies where an investment scheme has a hedging relationship between—
(a)an interest rate contract, and
(b)a qualifying investment held for the purposes of the fund.
(2)An investment scheme has a hedging relationship between an interest rate contract and a qualifying investment if or to the extent that—
(a)the interest rate contract and the investment are designated by the scheme as a hedge, or
(b)in any other case, the interest rate contract is intended to act as a hedge of exposure to—
(i)changes in fair value of the investment or an identified portion of the investment, or
(ii)variability in cash flows,
where the exposure is attributable to interest rates and could affect profit or loss of the investment scheme.
(3)Entering into the hedging relationship is not a deemed disposal of the relevant investment under section 809FZD(2).
(4)The interest rate contract is not an investment for the purposes of the investment scheme to the extent that the conditions in subsection (2)(a) and (b) are met.
(5)But the termination of the hedging relationship is the making of an investment constituting the interest rate contract if or to the extent that the interest rate contract continues to subsist.
(6)In this section “qualifying investment” means—
(a)money placed at interest,
(b)securities (excluding shares issued by companies),
(c)alternative finance arrangements, and
(d)a liability representing a loan relationship.]