Regulation 5 Amendment of regulation 3C

after sub-paragraph (c) insert—

“(ca)

debits and credits in relation to a derivative contract the underlying subject matter of which consists wholly or partly of a currency, to the extent that—

(i)

those debits and credits represent the reversal of exchange gains and losses arising to the company in an accounting period before the later period, and

(ii)

those exchange gains and losses have not been brought into account for the purposes of corporation tax by virtue of paragraph 16(3) of Schedule 26 to Finance Act 2002^f2, regulations 4 to 11 of the Exchange Gains and Losses (Alternative Method of Calculation of Gain or Loss) Regulations 1994^f3 or regulation 4 of the Disregard Regulations^f4;”; and

after sub-paragraph (d) insert—

“(da)

debits and credits in relation to a loan relationship which is denominated in a currency which is not, or was not, the company’s functional currency, to the extent that—

(i)

those debits and credits represent the reversal of exchange gains and losses arising to the company in an accounting period before the later period, and

(ii)

those exchange gains and losses have not been brought into account for the purposes of corporation tax by virtue of section 84A(3) of the Finance Act 1996, regulations 4 to 11 of the Exchange Gains and Losses (Alternative Method of Calculation of Gain or Loss) Regulations 1994 or regulation 3 of the Disregard Regulations^f5;”.