Corporation Tax Act 2009

615 Change of accounting policy after ceasing to be party to derivative contract U.K.

(1) This section applies if—

(a) the company has ceased to be a party to a derivative contract in an accounting period (“the cessation period”),

[F1 (b) section 607A (company is not, or has ceased to be, party to derivative contract) applied to the cessation, and]

(c) there is a difference between the amount outstanding in respect of the derivative contract (see subsection (5))—

(i) at the end of the earlier period, and

(ii) at the beginning of the later period.

[F2 (2) A credit or debit (as the case may be) of an amount equal to the difference must be brought into account for the purposes of this Part for the later period in the same way as a credit or debit which is brought into account in determining the company's profit or loss for that period in accordance with generally accepted accounting practice.]

(4) [F3 Subsection (2) does] not apply so far as the credit or debit falls to be brought into account apart from this section.

[F4 (5) In this section “the amount outstanding in respect of the derivative contract” means—

(a) so much of the recognised deferred income or recognised deferred loss from the derivative contract as has not been represented by credits or debits brought into account in accordance with this Part in respect of the contract, and

(b) any amounts relating to the matters mentioned in section 594A(1) in respect of the derivative contract that have in accordance with generally accepted accounting practice been recognised in the company's accounts as items of other comprehensive income and not transferred to become items of profit or loss.]

(6) In subsection (5)—

• “recognised deferred income”, in relation to a derivative contract, means the amount recognised in the company's balance sheet in accordance with generally accepted accounting practice as deferred income in respect of the profits which arose from the contract or a related transaction in the cessation period, and

• “recognised deferred loss”, in relation to a derivative contract, means the amount so recognised as deferred loss in respect of the losses which so arose.

[F5 (7) In determining what amounts fall within subsection (5)(b) at the beginning or end of a period, it is to be assumed that the accounting policy applied in drawing up the company's accounts for the period was also applied in previous periods.

(8) But if the company's accounts for the period are in accordance with generally accepted accounting practice drawn up on an assumption as to the accounting policy in previous periods which differs from that mentioned in subsection (7), that different assumption applies in determining what amounts fall within subsection (5)(b) at the beginning or end of the period.]

Textual Amendments

F1 S. 615(1)(b) substituted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 77(2)

F2 S. 615(2) substituted for s. 615(2)(3) (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 77(3)

F3 Words in s. 615(4) substituted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 77(4)

F4 S. 615(5) substituted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 77(5)

F5 S. 615(7)(8) inserted (with effect in accordance with Sch. 7 Pt. 6 of the amending Act) by Finance (No. 2) Act 2015 (c. 33), Sch. 7 para. 77(6)