Section 661 — Corporation Tax Act 2009: Contract which becomes derivative contract

Contract which becomes derivative contract 661 1 This section applies if—

a a company is a party to a relevant contract which (not having been a derivative contract) becomes a derivative contract, and b immediately before the relevant contract becomes a derivative contract it is a chargeable asset.

2 The company must bring into account for the accounting period in which it ceases to be a party to the relevant contract the amount of any chargeable gain or allowable loss which would have been treated as accruing to it on the assumptions in subsection (3).

3 Those assumptions are that—

a the company disposed of the relevant contract immediately before the relevant time, and b the disposal was for consideration of an amount equal to the notional carrying value of the relevant contract at that time.

4 In this section “ the relevant time ” means the time when the relevant contract becomes a derivative contract.

5 Section 622(4) (meaning of “notional carrying value”) applies for the purposes of this section.