Amendment to the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004

5.—(1) Amend regulation 4 (exchange gains or losses arising from derivative contracts hedging shares etc.) as follows.

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

(3) In paragraph (3)—

(a) for the first sentence substitute—

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

  (a)

  the derivative contract designated as a hedge if condition 1 is satisfied;

  (b)

  subject to paragraph (a), the derivative contract 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 party to”; and

(iii) omit “reasonably expect”;

(d) renumber—

(i) condition 2 as condition 1, and

(ii) condition 3 as condition 2.

(4) In paragraph (4)—

(a) for “condition 3” substitute “condition 2”;

(b) for “carrying value of” where it first appears substitute “value of the obligation under”; and

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

(5) In paragraph (5)—

(a) omit the definition of “carrying value”; and

(b) insert—

““the value of the obligation under the derivative contract” means the value of the obligation of the company to pay in exchange for one currency an amount of a second currency and includes any notional obligation to pay an amount of currency in respect of a contract for differences.”.