SCHEDULES

SCHEDULE 7Loan relationships and derivative contracts

Exchange gains and losses

9

1

Section 452 (exchange gains and losses where loan not on arm's length terms) is amended as follows.

2

For subsection (3) substitute—

3

Subsections (4) and (5) apply if, because of a claim made under section 192(1) of TIOPA 2010, or because of the claim that is assumed to be made under subsection (2)—

a

one company is treated for any purpose as having a debtor relationship, or

b

more than one company is treated for any purpose as having a debtor relationship represented by the same liability.

3

In subsection (4)—

a

after “exchange gains” insert “ from that debtor relationship (in a subsection (3)(a) case) or ”;

b

after “those debtor relationships” insert “ (in a subsection (3)(b) case) ”;

c

for the words from “debits” to the end substitute “ exchange gains or the proportion of the exchange gains to be left out of account under section 447 by the issuing company in respect of the loan relationship ”.

4

In subsection (5)—

a

after “exchange losses” insert “ from that debtor relationship (in a subsection (3)(a) case) or ”;

b

after “those debtor relationships” insert “ (in a subsection (3)(b) case) ”;

c

for the words from “credits” to the end substitute “ exchange losses or the proportion of the exchange losses to be left out of account under section 447 by the issuing company in respect of the loan relationship ”.

5

After subsection (5) insert—

5A

In this section “issuing company” is to be construed in accordance with section 191(1)(a) of TIOPA 2010.