Part 7

Derivative contracts
Chapter 1

Introduction

How profits and losses from derivative contracts are dealt with

Trading credits and debits to be brought into account under Part 3
573
1
This section applies so far as in an accounting period a company is a party to a derivative contract for the purposes of a trade it carries on.
2
The credits in respect of the contract for the period are treated as receipts of the trade which are to be brought into account in calculating the profits of the trade for that period.
3
The debits in respect of the contract for the period are treated as expenses of the trade which are deductible in calculating those profits.
4
So far as subsection (3) provides for any amount to be deductible, it applies despite anything in—
a
section 53 (capital expenditure),
b
section 54 (expenses not wholly and exclusively for trade and unconnected losses), or
c
section 59 (patent royalties).
5
For cases in which this section does not apply, see—
a
section 616 (disapplication of fair value accounting for certain embedded derivatives), and
b
Chapter 7 (chargeable gains arising in relation to derivative contracts).
Pt. 7 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
Pt. 7 modified by 2007 c. 3, s. 809FZZ(8) (as inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2))
Pt. 7 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)