Corporation Tax Act 2009 section 673

Meaning of G, L and CV in section 672

Section 673 defines the three variables — G, L and CV — used in the calculation under section 672 for determining the tax treatment of net gains and losses on disposal of certain embedded derivatives.

• G is the total of all chargeable gains from the derivative contract across all relevant accounting periods up to and including the period of disposal
• L is the total of all allowable losses from the derivative contract across all relevant accounting periods up to and including the period of disposal
• CV is the increase in the tax-adjusted carrying value of the host loan relationship between the date the company first entered the creditor relationship and the date of disposal
• The host contract is the loan relationship that the company is treated as party to because of the embedded derivative rules, and a relevant accounting period means the disposal period or any earlier period