Part 7

Derivative contracts
Chapter 7

Chargeable gains arising in relation to derivative contracts

Derivative contracts to which sections 640 and 641 apply

Exclusions from section 645
646
1
Section 645 does not apply to a derivative contract of a company for an accounting period if condition A or B is met in the period.
2
Condition A is that the rights and liabilities which fall to be treated as comprised in the derivative contract are such that the extent to which shares may be acquired in accordance with them is to be determined using a cash value—
a
which is specified in the contract for the asset representing the creditor relationship mentioned in section 645(2), or
b
which is or will be ascertainable by reference to that contract.
3
Condition B is that the rights and liabilities which fall to be treated as comprised in the derivative contract are such that—
a
the company is entitled or obliged to receive a payment instead of the shares which are the underlying subject matter of the derivative contract, and
b
the amount of that payment differs by more than an insignificant amount from the value of the shares which the company would be entitled to acquire in accordance with those rights and liabilities at the time it became entitled or obliged to receive the payment.
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)