The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014
| Jurisdiction | UK Non-devolved |
2014No. 3188
CORPORATION TAX
The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014
1stDecember2014
2ndDecember2014
31stDecember2014
The Treasury make the following Regulations in exercise of the powers conferred by sections 310, 328(4) and (7), 598(1)(a) and (4) and 606(4) and (7) of the Corporation Tax Act 2009( 1).
Citation, commencement and effect
1. (1) These Regulations may be cited as the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2014 and come into force on 31st December 2014.
(2) These Regulations have effect from that date, but-
(a) regulations 3, 4 and 5 have effect in relation to accounting periods beginning on or after 1st January 2015,
(b) regulations 6 and 7 have effect in relation to periods of account beginning on or after 1st January 2015.
(3) For the purposes of regulations 3, 4 and 5, an accounting period beginning before and ending on or after 1st January 2015 is to be treated for the purposes of these Regulations as if so much of the period as falls before that date, and so much of the period as falls on or after that date, were separate accounting periods.
Amendments to the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004
2. The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004( 2) are amended as follows.
Non-lending money debts
3. In regulation 3 (exchange gains or losses arising from liabilities or assets hedging shares etc), omit paragraph (1A)( 3).
Elections under regulation 4A
4. (1) Amend regulation 4A (relevant value)( 4) as follows.
(2) For paragraph (7) substitute-
"(7) An election under paragraph (1)-
(a) must be made by the company by notice in writing to an officer of Revenue and Customs, and
(b) must specify the review period.
(7A) An election-
(a) applies to all the shareholdings held by the company which are matched in accordance with regulation 3(3)(b) or 4(3)(b), and
(b) has effect from a date specified in the notice which must be later than the date the notice is given.
(7B) An election may be amended or revoked by notice in writing to an officer of Revenue and Customs-
(a) before the election has effect, or
(b) with effect from a date specified in the notice which must be-
(i) later than the date the notice is given, and
(ii) at least 12 months after the election was made.
(7C) Where the date specified in a notice under paragraph (7) or (7B) is not the first day of an accounting period so much of the period as falls before that date and so much of the period as falls on or after that date are treated as separate accounting periods."
(3) Omit paragraphs (8) to (8B).
5. In regulation 4C (review period)( 5), in paragraph (1) for "regulations 4A(7)(e)" substitute "regulations 4A(7)(b)".
Derivative contracts
6. For regulation 6 substitute-
"Application of regulations 7, 8 and 9 in relation to derivative contracts where fair value accounting applies
6.
(1) Regulation 7, 8 or 9 apply in relation to a derivative contract (which satisfies the conditions in regulation 7(1)(a), 8(1)(a) or 9(1), as the case may be) if-
(a) an election under regulation 6A has effect in relation to the contract,
(b) the contract or part of the contract is a designated fair value hedge,
(c) the hedged item is a loan relationship in relation to which the company uses fair value accounting, or
(d) the contract forms part of an arrangement the main purpose, or one of the main purposes, of which is to obtain a tax advantage in relation to that contract that would not arise if regulation 7, 8 or 9 applies.
(2) In paragraph (1)(d)-
"arrangement" includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable);
"tax advantage" has the meaning given in section 1139 of CTA 2010( 6).
Election to apply regulations 7, 8 or 9
6A.
(1) An election for the purposes of regulation 6(1)(a) must be made by a company by notice in writing to an officer of Revenue and Customs and applies regulations 7, 8 and 9 unless the notice states which of those regulations apply to the company's derivative contracts.
(2) The election has effect-
(a) in the case of a new adopter where the election is made on or before the later of the dates set out in paragraph (3), in relation to derivative contracts held in the first relevant period and any subsequent period, and
(b) in any other case, in relation to derivative contracts entered into on or after a date specified in the election which must be later than the date the election is made, and in the case of a new adopter cannot be before two years after the end of the first relevant period.
(3) The dates referred to in paragraph (2)(a) are-
(a) the date six months after the start of the first relevant period,
(b) the date six months after the date the company first enters into a relevant derivative contract in relation to which the company uses fair value accounting, and
(c) in the case of a company which is not a qualifying company for the purposes of Schedule 46 to the Finance Act 2009( 7), the date 12 months after the end of the first relevant period.
(4) An election may be amended or revoked by notice in writing to an officer of Revenue and Customs-
(a) in the case of an election made by a new adopter within paragraph (2)(a), before the later of the applicable dates set out in paragraph (3), or
(b) in any other case-
(i) before the election has effect, or
(ii) after the election has effect, in relation to derivative contracts entered into on or after a date specified in the notice which must be later than the date the notice is given, and in the case of a new adopter cannot be before two years after the end of the first relevant period.
(5) For the purposes of this regulation-
(a) a "new adopter" is a company which adopts fair value accounting for the first time on or after 1 January 2015 in relation to a relevant derivative contract,
(b) "the first relevant period" is the first accounting period in which a company uses fair value accounting in relation to a relevant derivative contract,
(c) a "relevant derivative contract" is a derivative contract which satisfies the conditions in regulation 7(1)(a), 8(1)(a) or 9(1).
Effect of elections on transfers within groups
6B.
(1) If a derivative contract, in relation to which regulation 7, 8 or 9 applies, is transferred by a company in circumstances in which...
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