This is the original version (as it was originally made). This item of legislation is currently only available in its original format.
(This note is not part of the Regulations)
These Regulations amend the Exchange Gains and Losses (Bringing into Account Gains or Losses) Regulations 2002, S.I. 2002/1970 (“the principal Regulations”). The principal Regulations provide for exchange gains or losses on loans or derivatives which hedge foreign exchange risk from a company’s investment in a foreign enterprise, and which have previously been disregarded for corporation tax purposes, to be brought back into account in specified circumstances. These amendments change the way in which this is achieved. The purpose of doing so is to eliminate anomalies in the interaction between the principal Regulations and the Taxation of Chargeable Gain Act 1992 (“the 1992 Act”).
Regulation 1 provides for citation, commencement and effect and regulation 2 for interpretation.
Regulation 3 amends regulation 2 (interpretation) of the principal Regulations by substituting the definition of “a no gain/no loss disposal” and making other amendments to ensure that the Regulations take account of relevant provisions of the 1992 Act.
Regulation 4 contains the main amendment to the principal Regulations by substituting a new regulation 4. The substituted regulation 4 provides a new rule for bringing amounts into account by providing that on disposal of a matched asset, the disposal consideration is increased by the amount of any net gain, or decreased by the amount of any net loss (the definition of “net loss” and “net gain” are provided by regulation 5 of the principal Regulations).
Regulation 5 omits regulation 5(4) of the principal Regulations which is no longer required because of substituted regulation 4.
Regulation 6 amends regulation 6 of the principal Regulations so as to ensure that it operates correctly having regard to substituted regulation 4.
Regulation 7 makes a minor amendment to regulation 7 of the principal Regulations.
Regulation 8 amends regulation 8 of the principal Regulations so as to ensure that it operates correctly having regard to the substituted regulation 4.
Regulations 9, 10, 11 and 12 omit respectively regulations 9, 10, 11 and 12 of the principal Regulations so as to take account of the amendments made by these Regulations, in particular the amendment of regulation 8 of the principal Regulations.
Regulation 13 provides that these Regulations do not have effect in relation to the disposal of an asset where the circumstances prescribed by regulation 3(3)(a) or (b) of the principal Regulations are satisfied.
Regulation 14 makes special provision in relation to an asset as regards which regulation 8(2)(a) of the principal Regulations has had effect in respect of a no gain/ no loss disposal before [date] but the net gain or net loss accruing at the time of that disposal has not been brought into account as a chargeable gain or allowable loss in accordance with regulations 8(2)(b), 10(3) or 12(3) of the principal Regulations. Regulation 14 provides that the company making the disposal may elect that these Regulations do not apply.
A full Impact Assessment has not been produced for this instrument as no impact on the private or voluntary sectors is foreseen.
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