Corporation Tax Act 2009 section 91

Contracts which became derivative contracts on 16 March 2005

Section 91 deals with the transitional tax treatment of contracts that were not previously derivative contracts but became derivative contracts at 3.00pm on 16 March 2005, and sets out how any embedded capital gain or loss up to that point should be recognised.

• Applies where a company held a contract both before and at 3.00pm on 16 March 2005, and that contract was not a derivative contract before that time but became one from that time onwards
• The contract must have been a chargeable asset for capital gains purposes immediately before 3.00pm on 16 March 2005
• When the company ceases to be a party to the contract, it must recognise any chargeable gain or allowable loss that would have arisen had the contract been disposed of immediately before 3.00pm on 16 March 2005
• The deemed disposal proceeds are the value given to the contract in the company's accounts at the end of the accounting period immediately before the first period that both began on or after 1 January 2005 and ended on or after 16 March 2005