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Regulation 4 Prescribed debits and credits

Changes not yet applied. Later legislation changes this provision in ways not yet written into the text below:

(1)

Subject to paragraph (2), the debits and credits prescribed for the purpose of regulation 3 are any debits or credits in the first accounting period of a company beginning on or after 1st January 2005 which must be brought into account in accordance with—

(a)

section 85B(1)(b) of the Finance Act 1996 (amounts recognised in determining company’s profit or loss)where the debit or credit represents a prior period adjustment;

(b)

paragraph 19A(3) of Schedule 9 to the Finance Act 1996 (adjustment on change of accounting policy);

(c)

paragraph 17B(1)(b) of Schedule 26 to the Finance Act 2002 (amounts recognised in determining company’s profit or loss) where the debit or credit represents a prior period adjustment;

(d)

paragraph 50A(2) of Schedule 26 to the Finance Act 2002 (adjustment on change of accounting policy).

(2)

The debits and credits falling within any of paragraphs (3), (4), (6) and (7) are not prescribed.

(3)

The debits or credits falling within this paragraph are debits or credits in relation to an asset or liability representing a loan relationship of a company (referred to in this regulation respectively as “a relevant asset” and “a relevant liability”) where the latest date on which it falls to be fully discharged is within an accounting period of the company which begins on or after 1st January 2005 and ends before 1st January 2006.This paragraph is subject to paragraphs (6) and (7).

(4)

The debits or credits falling within this paragraph are those in relation to a derivative contract to which—

(a)

regulation 4 of the Disregard Regulations applies, if the matched asset is a relevant asset; or

(b)

the Disregard Regulations do not apply, if there is a hedging relationship between the derivative contract and a hedged item which is a relevant asset or liability.

(5)

In paragraph (4) “the Disregard Regulations” means the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 and expressions which are defined for the purposes of those Regulations have the same meanings in that paragraph (4) as they have in those Regulations.

(6)

The debits falling within this paragraph are debits in relation to an asset representing a loan relationship falling within section 94A of the Finance Act 1996 (loan relationships with embedded derivatives) to the extent that the debit falling within section 85B(1)(b) of, or paragraph 19A(3) of Schedule 9 to, the Finance Act 1996 in relation to the host contract does not exceed the amount produced by the formula C – I.

  • Here—

  • C is the amount of any credit given in relation to the loan relationship for the accounting periods of the company beginning on or after 1st January 2005 but before 1st January 2006, and

  • I is the amount of interest receivable under the loan relationship for those periods.

(7)

The credits falling within this paragraph are credits in relating to an asset representing a loan relationship falling within section 94A of the Finance Act 1996 (loan relationships with embedded derivatives) to the extent that the debit falling within section 85B(1)(b) of, or paragraph 19A(3) of Schedule 9 to, the Finance Act 1996 in relation to the host contract does not exceed the amount produced by the formula D – I.

  • Here—

  • D is the amount of any debit given in relation to the loan relationship for the accounting periods of the company beginning on or after 1st January 2005 but before 1st January 2006, and

  • I is the amount of interest receivable under the loan relationship for those periods.