Corporation Tax Act 2009 section 599A

Amounts not fully recognised for accounting purposes: introduction

Section 599A introduces the rule in section 599B, which adjusts the tax credits and debits a company must bring into account for derivative contracts where, as a result of tax avoidance arrangements, amounts relating to those contracts are not fully recognised in the company's accounts.

• Where a company is party to a derivative contract and tax avoidance arrangements cause an amount not to be fully recognised in the accounts for that contract, section 599B applies to determine the correct credits and debits for corporation tax purposes.
• An amount is "not fully recognised" if either nothing at all is recognised in profit or loss for the contract, or only part of the contract is reflected in the figures.
• "Tax avoidance arrangements" means any scheme, understanding or set of transactions — whether legally enforceable or not — where a main purpose of any party in entering into them is to obtain a tax advantage.
• A company is still treated as a party to a derivative contract even if it has transferred its rights and liabilities under the contract to someone else through a repo, stock lending arrangement, or a transaction treated as not being a disposal under the chargeable gains rules on mortgages and charges.