Section 700 — Corporation Tax Act 2009: Relationship of this Part to Part 5: loan relationships

Relationship of this Part to Part 5: loan relationships 700 1 This section applies if—

a a company is a party to a loan relationship because of a derivative contract, and b in accordance with this Part, a profit or loss accrues to the company on the contract for an accounting period (“the derivative profit or loss”).

2 The general rule is that this Part does not apply to the derivative profit or loss if—

a an amount representing the derivative profit or loss, or b an amount representing the profit or loss accruing to that company on the contract, is brought into account for that period for the purposes of Part 5 otherwise than because of section 574.

3 But in a case where section 585 (loan relationships with embedded derivatives) applies, the general rule does not apply so far as—

a the derivative profit or loss accrues from the rights and liabilities mentioned in section 585(1)(b) (rights and liabilities under derivative financial instruments or equity instruments),

and b that profit or loss is dealt with in accordance with that section and this Part.