Section 642 | Exception from section 641

(1)Section 641 does not apply to a derivative contract to which section 645 applies if, on the assumptions in subsection (2), paragraph 2 of Schedule 7AC to TCGA 1992 (substantial shareholding exemptions: gain on disposal of asset related to shares not a chargeable gain) would apply to the gain mentioned in subsection (2)(d).

(2)Those assumptions are that—

(a)the rights and liabilities treated as comprised in the derivative contract were contained in a separate contract,

(b)that separate contract was an option,

(c)that option was disposed of at the end of the accounting period, and

(d)a gain accrued to the company on the disposal for the purposes of corporation tax on chargeable gains.