Corporation Tax Act 2009 section 614

Change of accounting policy involving change of value

Section 614 deals with how to handle differences in the carrying value of a derivative contract when a company changes its accounting policy between two periods.

• When a company changes its accounting policy, a difference may arise between the tax-adjusted carrying value of a derivative contract at the end of one period and its tax-adjusted carrying value at the start of the next period.
• Any such difference must be brought into account as a credit or debit for the later period, treated in the same way as credits or debits recognised in the company's profit or loss under generally accepted accounting practice.
• The term "carrying value" is specifically defined elsewhere in the Act (section 702) and refers to the tax-adjusted carrying value of the derivative contract.
• This rule does not apply where the credit or debit is already being brought into account under another provision, such as a prior period adjustment under section 597(2).