CFM51032 | Derivative contracts: the matters and computational rules: the matters in respect of which amounts are to be brought into account

CTA09/S594A

This guidance applies to company periods of account beginning on or after 1 January 2016.

The derivative contract matters;

The amendments made by F(2)A15 did not fundamentally amend the scope of the derivative contracts provisions. But the provisions are now drafted so as to make a clear distinction between the matters that are within the ambit of the provisions and the way in which the amounts brought into account should be quantified, dealt with primarily in amended CTA09/S595.

The matters are set out in new S306A and are the same as those previously included in S594(3). They are:

(a) profits and losses of the company that arise to it from its derivative contracts and related transactions (excluding expenses), and

(c) expenses incurred by the company under or for the purposes of those contracts and transactions.

A related transaction is widely defined in S596 to cover any transaction involving a derivative contract, including a change in its terms, but does not include its initial creation. See CFM51060. For guidance on determination of the profits and losses to be brought into account in respect of the derivative contracts matters, see CFM51034.

The matters are as for loan relationships, with the exclusion of interest, which will not arise because, in the case of derivatives, there is no amount of debt principal arising from lending or deemed lending, see CFM33030.