At Budget 2013, the Government announced a consultation on a package of proposals to modernise the corporate tax (CT) rules governing the taxation of corporate debt and derivative contracts. As a result of these changes, certain consequential amendments are needed to the Change of Accounting Practice (COAP) Regulations 2004, which provide specific tax treatment for loan relationships and derivative contracts on a change of accounting policy, to avoid double taxation or double relief. Amounts may otherwise be brought into account under both the new rules and under the COAP Regulations. HMRC have now published draft regulations for technical consultation which will give effect to these consequential amendments.
The amendments will prevent further amounts being brought into account under the 10 year spreading rules where those amounts are amounts within other comprehensive income at the commencement of the new Part 5 and Part 7 rules. The regulations have effect for periods of account beginning on or after 1 January 2016.
HMRC have requested any comments on the consultation by 4 November 2016.
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