Corporation Tax Act 2009 section 600

Contract which is or forms part of financial asset or liability

Section 600 requires that fair value accounting must be used to determine taxable amounts for certain derivative contracts that are treated as financial assets or liabilities for accounting purposes.

• This section applies to derivative contracts that qualify under the accounting condition in section 579(1)(b) — i.e. contracts that are, or form part of, a financial asset or liability for accounting purposes
• These are contracts that fail to meet the relevant accounting standard's definition of a derivative (typically because they require too large an initial net investment) but are nonetheless recognised as a financial asset or liability on the balance sheet
• For these contracts, the amounts brought into account for corporation tax purposes must be determined using fair value accounting, regardless of how the company might otherwise account for them
• This ensures a consistent tax treatment by mandating a single measurement basis — fair value — for this particular category of derivative contract