Corporation Tax Act 2009 section 607A

Company is not, or has ceased to be, party to derivative contract

Section 607A ensures that where a company recognises amounts in its accounts relating to a derivative contract to which it is not legally a party, those amounts are still brought into account for corporation tax purposes as if the company were a party to that contract.

• If a company's accounts show profit or loss items for a derivative contract it is not actually a party to, and one of four specified conditions is met, the company must bring those amounts into account for tax as though it were a party to the contract for the whole accounting period.
• The four conditions cover situations where the company was formerly a party and residual amounts remain in its accounts, where risk or reward has been transferred without a formal transfer of contractual rights, where amounts arise from a related transaction after the company ceased to be a party, or where amounts arise because the company may enter into a contract but has not yet done so.
• A qualifying contract means either a derivative contract of the company or a contract that would be a derivative contract if the definition were not restricted to companies — meaning contracts held by any person can be caught.
• The amounts to be brought into account are those recognised in the company's accounts as items of profit or loss in accordance with generally accepted accounting practice, but remain subject to the other provisions of Part 7, including restrictions under sections 607B and 607C.