The Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) (Amendment) Regulations 2015

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations amend the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (“the principal Regulations”) which allow certain profits and losses from loan relationships and derivative contracts to be left out of account, to be brought into account in a different way or to be brought into account at a later date.

Regulation 1 provides for citation, commencement and effect.

Regulation 2 introduces the amendments.

Regulation 3 amends regulation 2 to update the interpretation provisions in consequences of changes to accounting standards and amendments made to Part 5 of the Corporation Tax Act 2009 by the Finance (No 2) Act 2015.

Regulation 4 inserts a new regulation 5A to ensure that following the amendments made to Part 5 of the Corporation Tax Act 2009 by the Finance (No 2) Act 2015 the principal Regulations continue to apply properly to disregard exchange gains and losses in respect of net investment hedges of foreign operations.

Regulation 5 makes consequential amendments and amends regulation 6A in relation to the time limits for revocation of elections to apply regulations 7, 8 or 9 of the principal Regulations.

Regulation 6 substitutes regulation 6B and inserts new regulations 6C and 6D to restrict the application of the principal Regulations where a derivative contract is transferred to a group company.

Regulation 7 makes consequential amendments and amends regulation 7 to ensure that exchange gains and losses from derivative contracts matching shares, ships or aircraft are not brought into account under that regulation or regulation 10.

Regulation 8 makes consequential amendments and amends regulation 9 to provide that in determining the amount brought into account under that regulation regard must be had to the unexpired term of a hedged item.

Regulation 9 omits regulation 9A as special rules in relation to designated cash flow hedges are not needed following amendments made by the Finance (No 2) Act 2015.

Regulation 10 amends regulation 10 where derivation contracts have bee transferred within a group and omits provisions which are not needed following amendments made by the Finance (No 2) Act 2015.

Tax Information and Impact Note for the modernisation of the taxation of corporate debt and derivative contracts which covers this instrument was published at Summer Budget 2015 on 8th July 2015 and is available on the HMRC website at: www.gov.uk/government/collections/tax-information-and-impact-notes-tiins. It remains an accurate summary of the impacts that apply to this instrument.