Corporation Tax Act 2009 section 608

Company ceasing to be party to derivative contract

Section 608 deals with how deferred profits or losses on a derivative contract are brought into account for corporation tax purposes after a company has ceased to be a party to that contract.

• Where a company's accounting policies defer recognition of part of a derivative contract's profit or loss beyond the period in which the company ceased to be a party, those deferred amounts must still be brought into account as taxable credits or allowable debits in later periods.
• The section ensures that all deferred income or loss is progressively recognised for tax purposes in the subsequent accounting periods until it has been fully brought into account.
• Certain conditions elsewhere in the derivative contracts legislation that would normally require a company to be a party to a derivative contract are treated as satisfied in respect of the former contract, so that the relevant tax rules can continue to apply to the post-cessation credits and debits.
• This deeming treatment extends to any question of whether a company holds derivative contracts or is a party to a derivative contract, ensuring consistent treatment throughout the legislation.