Corporation Tax Act 2009 section 328C

Meaning of "test day"

Section 328C defines what counts as a "test day" for the purposes of identifying avoidance arrangements involving options or option-like contracts on foreign exchange movements.

• A "test day" is a key date used to assess whether foreign exchange avoidance arrangements produce a one-sided tax benefit.
• The arrangements targeted involve options or contracts that behave like options (called "relevant contingent contracts"), typically linked to whether sterling strengthens or weakens against another currency.
• For options, a test day is the day the option is exercised, sold, novated, or its terms are changed; if the option is not exercised during the accounting period, each day on which it could have been exercised counts as a test day, and the last day of the accounting period is always a test day.
• Similar rules apply where the arrangements involve relevant contingent contracts rather than formal options.