SolvedCFM57450 | Derivative contracts: hedging: pre-2015: regulation 9 elections: time limits and effects
From HM Revenue & Customs · Corporate Finance Manual
This guidance applies to periods of account starting before 1 January 2015.
Regulations 6(5) and 6(5B): summary of time limits and effects
| - | Regulation 6(5) election | Regulation 6(5B) |
|---|---|---|
| Time limit | Before 31 March 2006, except in the circumstances set out in note 1 below. | Before 1 April 2007, except in the circumstances set out in note 1 below. |
| Fair value hedges of connected party debt (or of preference shares or similar) | ‘Appropriate accruals basis’ of regulation 9 applies. | ‘Appropriate accruals basis’ of Regulation 9 applies. |
| Cash flow hedges of connected party debt | ‘Appropriate accruals basis’ of regulation 9 applies. | Regulation 9A treatment (CFM57420) applies |
| Undesignated hedges of connected party debt | ‘Appropriate accruals basis’ of regulation 9 applies. | Regulation 9 applies if company uses fair value accounting for the loan relationship; otherwise normal CTA09/PART7 treatment. |
| All other cash flow hedges | Regulation 9A treatment applies | Regulation 9A treatment applies |
| All other undesignated hedges | Normal CTA09/PART7 treatment applies - fair value changes on derivative taxed or relieved | Normal CTA09/PART7 treatment applies - fair value changes on derivative taxed or relieved |
Note: An election, whether under regulation 6(5) or regulation 6(5B), may be made later if either
The company has not adopted fair value accounting for its derivative contracts in a period of account beginning on or after 1 January 2005, but adopts it for a later period; or
The company does not have any contracts to which regulation 9 applies in its first period of account beginning on or after 1 January 2005, but acquires such contracts later.
The rules governing time limits in these circumstances are the same as for elections under regulation 6(3) or (3A) - see CFM57370.