Part 7

Derivative contracts
Chapter 8

Further provision about chargeable gains and derivative contracts

Treatment of net gains and losses on disposal of certain embedded derivatives

Meaning of G, L and CV in section 672
673
1
This section applies for the purposes of section 672.
2
G is the sum of the amounts of any chargeable gains treated as accruing to the company under section 641(3)(a) (derivative contracts to be taxed on a chargeable gains basis) in respect of the derivative contract in each relevant accounting period.
3
L is the sum of the amounts of any allowable losses treated as accruing to the company under section 641(3)(b) in respect of the derivative contract in each relevant accounting period.
4
CV is the amount by which the tax-adjusted carrying value of the host contract at the date of the disposal exceeds the tax-adjusted carrying value of that contract at the date on which the company became a party to the creditor relationship mentioned in section 648(2).
5
In this section—
- “the host contract” means the loan relationship to which the company is treated as a party under section 415(2) (loan relationships with embedded derivatives) because of the creditor relationship mentioned in section 648(2), and
- “relevant accounting period” means—
  1. the accounting period in which the disposal is made, or
  2. any previous accounting period.
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)
Words in s. 673(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. 86
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)