Section 700 | Relationship of this Part to Part 5: loan relationships

(1)This section applies if—

(a)a company is a party to a loan relationship because of a derivative contract, and

(b)in accordance with this Part, a profit or loss accrues to the company on the contract for an accounting period (“the derivative profit or loss”).

(2)The general rule is that this Part does not apply to the derivative profit or loss if—

(a)an amount representing the derivative profit or loss, or

(b)an amount representing the profit or loss accruing to that company on the contract,

is brought into account for that period for the purposes of Part 5 otherwise than because of section 574.

(3)But in a case where section 585 (loan relationships with embedded derivatives) applies, the general rule does not apply so far as—

(a)the derivative profit or loss accrues from the rights and liabilities mentioned in section 585(1)(b) (rights and liabilities under derivative financial instruments or equity instruments), and

(b)that profit or loss is dealt with in accordance with that section and this Part.