Corporation Tax Act 2009 section 573

Trading credits and debits to be brought into account under Part 3

Section 573 explains how gains and losses on derivative contracts held for trading purposes are treated when calculating a company's trading profits.

• Where a company holds a derivative contract for trading purposes, any credits (gains) are treated as trading receipts and any debits (losses) are treated as deductible trading expenses for that accounting period.
• The deductibility of debits overrides the normal restrictions on capital expenditure, the requirement that expenses be wholly and exclusively for trade purposes, and patent royalty rules.
• This section does not apply where fair value accounting has been disapplied for certain embedded derivatives, or where chargeable gains rules apply to the derivative contract instead.
• The effect is that profits and losses on trading derivative contracts flow through the company's trading income computation under Part 3 of the Act.