Commentary

D1.839 Relevant credits and debits

Corporate tax
Corporate tax | Commentary

D1.839 Relevant credits and debits

Corporate tax | Commentary

Computation of relevant debits and credits

D1.839 Relevant credits and debits

For accounting periods beginning on or after 1 January 2016 the general rule is that the amounts which are brought into account in computing a company's profits for the purposes of the derivative contracts legislation are:

  1.  

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

  2.  

    (b)     expenses incurred by the company under all for the purposes of those contracts and transactions1

For such accounting periods such amounts are generally recognised for the purposes of the derivative contracts legislation on the basis that they are recognised in determining the company's accounting profit or loss for the relevant accounting period2. Further, for such accounting periods there is no 'fairly represents' override3.

Where a company's period of account (statutory accounting period) exceeds 12 months in length, such that it will have two accounting periods, the normal rule is that the profit or loss recognised in its accounts in respect of its derivative contracts for the relevant period of account is apportioned between the two accounting periods on a time basis unless such apportionment would work unreasonably or unjustly. In

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