Corporation Tax Act 2009 section 602

Contract becoming one relating to holding in OEIC, unit trust or offshore fund

Section 602 establishes how to determine the opening valuation of a derivative contract when it transitions into one that relates to a holding in an open-ended investment company (OEIC), unit trust or offshore fund between two successive accounting periods.

• The section applies where a company holds a relevant contract across two successive accounting periods and the contract becomes treated as relating to an OEIC, unit trust or offshore fund in the second period but was not so treated in the first period
• The contract must have been a chargeable asset (for capital gains purposes) immediately before the start of the second accounting period
• The opening valuation of the contract at the start of the second period is set at market value, being the amount the contract would have fetched if disposed of immediately before the end of the first accounting period
• Separate rules under section 660 apply when the company subsequently ceases to be a party to the contract