Corporation Tax Act 2009 section 81

Disapplication of section 645

Section 81 disapplies the rules in section 645 concerning embedded derivatives which are options within creditor relationships, where the underlying asset falls within a specific transitional provision in the Finance Act 2004.

• Section 645 normally applies special rules to embedded derivatives that are options within creditor relationships
• This section switches off those rules where the creditor relationship asset is subject to the transitional provision in paragraph 9(2) of Schedule 10 to the Finance Act 2004
• The disapplication is assessed on a company-by-company and accounting-period-by-accounting-period basis
• The effect is to preserve the older tax treatment for certain legacy instruments rather than applying the embedded derivative rules