Corporation Tax Act 2009 section 702

"Tax-adjusted carrying value"

Section 702 defines the term "tax-adjusted carrying value" of a derivative contract and explains how it should be calculated for the purposes of the derivative contracts rules.

• The tax-adjusted carrying value starts with the carrying value of a derivative contract as recognised in the accounts, including accrued amounts, prepayments, and impairment losses (such as bad debt provisions).
• It is assumed that the accounting policy used for the current period was also applied in earlier periods, unless the accounts are properly drawn up under generally accepted accounting practice using a different assumption about prior period policies.
• If the value needs to be determined at a date other than the end or beginning of an accounting period, it is calculated as though a period of account had ended on that date.
• Certain specific tax rules — covering embedded derivatives, profit and loss recognition, amounts not fully recognised in the accounts, group transactions, and European cross-border transfers and mergers — must also be taken into account when arriving at the tax-adjusted carrying value.