Corporation Tax Act 2009 section 650

Property based total return swaps

Section 650 defines the conditions under which a derivative contract qualifies as a property-based total return swap, so that its gains and losses may be treated as chargeable gains or allowable losses rather than as normal trading income.

• The contract must be a contract for differences whose underlying subject matter includes both an index tracking changes in land values and interest rates.
• The company must not hold the contract for the purposes of a trade it carries on, and must not be an "excluded body" as defined elsewhere in the Act.
• No two or more parties to the contract may be connected persons, ensuring the arrangement is conducted at arm's length.
• Obtaining a tax advantage must not be the main purpose, or one of the main purposes, for which the company entered into the contract.