Corporation Tax Act 2009 section 613

Introduction to sections 614 and 615

Section 613 sets out the conditions under which sections 614 and 615 apply when a company changes its accounting basis for derivative contracts, and explains how certain elections relating to embedded derivatives are treated as a change of accounting policy.

• Sections 614 and 615 apply when a company changes the accounting basis used to calculate credits and debits on its derivative contracts from one period to the next, provided the change is either required by the derivative contracts rules or results from a change in accounting policy
• The change must not be driven by new amending legislation that did not apply to the previous period, and both the old and new bases must accord with the law and practice applicable to their respective periods
• The period before the change is called the "earlier period" and the period after is called the "later period"
• Where a company makes an election under section 416 to split a loan relationship into its loan and derivative or equity components, this is treated as a change of accounting policy for the purposes of sections 614 and 615, taking effect from the date the election applies