Explanatory note

These Regulations amend the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271, as amended by S.I. 2004/3347; the “Principal Regulations”) which made provision for certain debits and credits not to be brought into account in the first accounting period beginning on or after 1st January 2005 but to be brought into account in the first accounting period beginning on or after 1st January 2006.

Regulation 1 provides for citation, commencement and effect. Authority for the limited retrospective effect of these Regulations is given by paragraph 52 of Schedule 4 to the Finance Act 2005 (c. 7).

Regulation 2 introduces the amendments to the Principal Regulations.

Regulation 3 amends regulation 2 (interpretation) of the Principal Regulations

Regulation 4 amends regulation 3 (credits and debits not brought into account) of the Principal Regulations consequent on the new regulations introduced by regulation 5.

Regulation 5 inserts new regulations 3A, 3B and 3C into the Principal Regulations. New regulation 3A introduces a provision to bring into account over a ten year period specified debits and credits not brought into account in the first accounting period beginning on or after 1st January 2005. New regulation 3B introduces a provision in relation to debits and credits in respect of dormant accounts of banks and building societies which are to be brought into account in the first accounting period beginning on or after 1st January 2007. New regulation 3C makes provision for specified debits and credits in relation to certain derivative contracts not to be brought into account for any period.

Regulation 6 amends regulation 4 (prescribed credits and debits) of the Principal Regulations.

Regulation 7 amends regulation 5 (amounts recognised in determining a company’s profit or loss in relation to held-to-maturity assets) of the Principal Regulations.

These Regulations impose no new costs on business.