Part 7

Derivative contracts
Chapter 12

Priority rules

Relationship of this Part to Part 5: loan relationships
700
1
This section applies if—
a
a company is a party to a loan relationship because of a derivative contract, and
b
in accordance with this Part, a profit or loss accrues to the company on the contract for an accounting period (“the derivative profit or loss”).
2
The general rule is that this Part does not apply to the derivative profit or loss if—
a
an amount representing the derivative profit or loss, or
b
an amount representing the profit or loss accruing to that company on the contract,
is brought into account for that period for the purposes of Part 5 otherwise than because of section 574.
3
But in a case where section 585 (loan relationships with embedded derivatives) applies, the general rule does not apply so far as—
a
the derivative profit or loss accrues from the rights and liabilities mentioned in section 585(1)(b) (rights and liabilities under derivative financial instruments or equity instruments), and
b
that profit or loss is dealt with in accordance with that section and this Part.
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)