Corporation Tax Act 2009 section 92

Contracts which became derivative contracts on 28 July 2005

Section 92 provides transitional rules for contracts that were not previously derivative contracts but would have become derivative contracts on 28 July 2005, ensuring that any pre-existing capital gains position is preserved.

• Applies where a company held a contract both immediately before and on 28 July 2005 that was not previously a derivative contract but would have become one on that date, and was a chargeable asset immediately beforehand
• The contract is treated for corporation tax purposes as a new derivative contract entered into on 28 July 2005 at its fair value on that date
• When the company eventually disposes of the contract, it must also account for any chargeable gain or allowable loss that would have arisen had it disposed of the contract immediately before 28 July 2005 at fair value
• This ensures the capital gains element accrued up to 28 July 2005 is not lost but is brought into account in the period the company ceases to be a party to the contract