Section 659 Meaning of “relevant credits” and “relevant debits”

United Kingdom

(1)

This section applies for the purposes of this Chapter.

(2)

In the case of a derivative contract which is not one to which section 650 (property based total return swaps) applies for an accounting period, the relevant credits and debits are the credits and debits which are given in relation to the derivative contract for the accounting period by section 595.

(3)

In the case of a derivative contract to which section 650 applies for an accounting period, the relevant credits and debits are the credits and debits which—

(a)

are given in relation to the derivative contract for the accounting period by section 595, and

(b)

are within subsection (4).

(4)

The credits and debits are those found for the period by applying R% to N, where—

N is the amount which is the notional principal amount in the case of the derivative contract, and
R% is the percentage change (if any) in the capital value index over the relevant period.

F1(4A)

But if the derivative contract has effect such that the return arising from the contract, so far as calculated by reference to that index, is calculated by reference to a percentage (“the capped percentage”) which is closer to zero than the full percentage change in that index over that period (or which is zero even though there has been a change in that index), for the purposes of subsection (4) R% is the capped percentage.

(5)

In subsection (4) “the relevant period” means—

(a)

the accounting period, if the company is a party to the derivative contract throughout that period,

(b)

in any other case, any part of the accounting period throughout which the company is a party to the derivative contract.

(6)

For the meaning of “the capital value index”, see section 650(4).

Annotations

Textual amendments

F1: S. 659(4A) inserted (with effect in accordance with s. 41(5)(6) of the amending Act) by Finance Act 2013 (c. 29), s. 41(4)

Notes on Part 7

Modifications

C1: Pt. 7 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)
C2: Pt. 7 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
C3: Pt. 7 modified by 2007 c. 3, s. 809FZZ(8) (as inserted (with effect in accordance with s. 37(4) of the amending Act) by Finance Act 2016 (c. 24), s. 37(2))
C4: Pt. 7 modified (for the tax year 2026-27 and subsequent tax years (but in relation to investment management services whenever performed)) by 2005 c. 5, Sch. A1 para. 35(6) (as inserted by Finance Act 2026 (c. 11), s. 58(6), Sch. 11 para. 1)