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Legislation
Corporation Tax Act 2009

Crossheading Derivative contracts to which sections 640 and 641 apply

  • Section 643 Contracts relating to land or certain tangible movable property
  • Section 644 Income to be left out of account in determining whether section 643 applies
  • Section 645 Creditor relationships: embedded derivatives which are options
  • Section 646 Exclusions from section 645
  • Section 647 Meaning of certain expressions in section 645
  • Section 648 Creditor relationships: embedded derivatives which are exactly tracking contracts for differences
  • Section 649 Meaning of certain expressions in section 648
  • Section 650 Property based total return swaps
  1. Derivative contracts to which sections 640 and 641 apply
  2. Exclusions from section 645

Section 646 | Exclusions from section 645

From legislation.gov.uk

(1)Section 645 does not apply to a derivative contract of a company for an accounting period if condition A or B is met in the period.

(2)Condition A is that the rights and liabilities which fall to be treated as comprised in the derivative contract are such that the extent to which shares may be acquired in accordance with them is to be determined using a cash value—

(a)which is specified in the contract for the asset representing the creditor relationship mentioned in section 645(2), or

(b)which is or will be ascertainable by reference to that contract.

(3)Condition B is that the rights and liabilities which fall to be treated as comprised in the derivative contract are such that—

(a)the company is entitled or obliged to receive a payment instead of the shares which are the underlying subject matter of the derivative contract, and

(b)the amount of that payment differs by more than an insignificant amount from the value of the shares which the company would be entitled to acquire in accordance with those rights and liabilities at the time it became entitled or obliged to receive the payment.

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