Corporation Tax Act 2009 section 328B

Meaning of "relevant exchange gain" and "relevant exchange loss"

Section 328B defines when an exchange gain or loss qualifies as "relevant" for the purposes of computing amounts A and B in the one-way exchange effect rules.

• An exchange gain or loss is "relevant" only if three conditions are all met: it arises on a loan relationship or a relevant contract, that instrument is part of the arrangements in question, and a debit or credit is brought into account for corporation tax purposes in respect of the gain or loss.
• Where exchange differences are disregarded under the forex matching rules, they do not count — because no debit or credit is actually brought into account for those amounts.
• When testing whether a debit or credit would be brought into account, the one-way exchange effect provisions themselves are ignored, so that the definition does not become circular.
• The unallowable purpose anti-avoidance rules are also disregarded when making this assessment, because those rules can themselves create the kind of asymmetries that the one-way exchange effect provisions are designed to address.