Taxation (International and Other Provisions) Act 2010 Schedule 9 paragraph 32

Exclusion of certain debits and credits

Paragraph 32 of Schedule 9 provides that certain loan relationship debits and credits must be excluded from the derivative contracts rules when they arise in connection with transactions between companies that are related to each other.

• Where a derivative contract gives rise to debits or credits that would also be recognised under the loan relationships rules, those amounts must be excluded from the derivative contracts regime to prevent double counting.
• This exclusion applies specifically to amounts arising from transactions between companies that have a relevant connection to each other, ensuring that the same economic gain or loss is not taxed or relieved twice under different sets of rules.
• The provision works by requiring that where an amount is properly within the scope of the loan relationships legislation, it takes priority and the derivative contracts rules stand aside.
• This paragraph was amended by Finance (No. 2) Act 2017 to refine the scope of the exclusion and ensure it operates correctly within the updated framework for taxing financial instruments.

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