Amendment to the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 20044

1

Amend regulation 3 (exchange gains or losses arising from liabilities or assets hedging shares etc.) as follows.

2

After paragraph (1) insert—

1A

For the purposes of paragraph (1) a liability representing a loan relationship does not include any liability representing a relationship within section 100(1) of the Finance Act 19967.

3

In paragraph (2) after “value” insert “, or profits or losses arising on the disposal,”.

4

In paragraph (3)—

a

for the first sentence substitute—

  • Shares, ships or aircraft are matched to the greatest possible extent with—

    1. a

      the liability representing the loan relationship designated as a hedge if condition 1 is satisfied;

    2. b

      subject to paragraph (a), the liability representing the loan relationship referred to in condition 2 if that condition is satisfied;

b

omit condition 1;

c

in condition 3—

i

for “could” substitute “intends”;

ii

after “into” insert “and continuing to be subject to”; and

iii

omit “reasonably expect”;

d

renumber—

i

condition 2 as condition 1, and

ii

condition 3 as condition 2.

5

In paragraph (4)—

a

for “condition 3” substitute “condition 2”; and

b

after “into” insert “or, if later, when the asset is acquired”.