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STATUTORY INSTRUMENTS


2005 No. 3383

CORPORATION TAX

The Loan Relationships and Derivative Contracts (Change of Accounting Practice) (Amendment) Regulations 2005

  Made 7th December 2005 
  Laid before House of Commons 8th December 2005 
  Coming into force 29th December 2005 

The Treasury, in exercise of the powers conferred upon them by section 85B(3) and (5) of, and paragraph 19B of Schedule 9 to, the Finance Act 1996[1], paragraph 17C of Schedule 26 to the Finance Act 2002[2] and paragraph 52 of Schedule 4 to the Finance Act 2005[3], make the following Regulations:

Citation, commencement and effect
     1. —(1) These Regulations may be cited as the Loan Relationships and Derivative Contracts (Change of Accounting Practice) (Amendment) Regulations 2005 and shall come into force on 29th December 2005.

    (2) These Regulations have effect in relation to periods of account beginning on or after 1st January 2005.

Amendment to the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004
    
2. Amend the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004[4] as follows.

     3. In regulation 2 (interpretation) after the definition of "amortised cost basis of accounting" insert—

     4. In regulation 3 (credits and debits not brought into account)—

     5. After regulation 3 insert—

     6. —(1) Amend regulation 4 (prescribed debits and credits) as follows.

    (2) In paragraph (1) for "the first" substitute "any".

    (3) In paragraph (2) for "any of paragraphs (3), (4), (6) and (7)" substitute "paragraph (3) and (4)".

    (4) In paragraph (3)—

    (5) For paragraph (4) substitute—

    (6) Omit paragraphs (6) and (7).

    
7. In paragraph (5)(d) of regulation 5 (amounts recognised in determining a company's profit or loss in relation to held-to-maturity assets) for "greater" substitute "less".


Vernon Coaker

Dave Watts

Two of the Lords Commissioners of Her Majesty's Treasury

7th December 2005



EXPLANATORY NOTE

(This note is not part of the Regulations)


These Regulations amend the Loan Relationships and Derivative Contracts (Change of Accounting Practice) Regulations 2004 (S.I. 2004/3271, as amended by S.I. 2004/3347; the "Principal Regulations") which made provision for certain debits and credits not to be brought into account in the first accounting period beginning on or after 1st January 2005 but to be brought into account in the first accounting period beginning on or after 1st January 2006.

Regulation 1 provides for citation, commencement and effect. Authority for the limited retrospective effect of these Regulations is given by paragraph 52 of Schedule 4 to the Finance Act 2005 (c. 7).

Regulation 2 introduces the amendments to the Principal Regulations.

Regulation 3 amends regulation 2 (interpretation) of the Principal Regulations

Regulation 4 amends regulation 3 (credits and debits not brought into account) of the Principal Regulations consequent on the new regulations introduced by regulation 5.

Regulation 5 inserts new regulations 3A, 3B and 3C into the Principal Regulations. New regulation 3A introduces a provision to bring into account over a ten year period specified debits and credits not brought into account in the first accounting period beginning on or after 1st January 2005. New regulation 3B introduces a provision in relation to debits and credits in respect of dormant accounts of banks and building societies which are to be brought into account in the first accounting period beginning on or after 1st January 2007. New regulation 3C makes provision for specified debits and credits in relation to certain derivative contracts not to be brought into account for any period.

Regulation 6 amends regulation 4 (prescribed credits and debits) of the Principal Regulations.

Regulation 7 amends regulation 5 (amounts recognised in determining a company's profit or loss in relation to held-to-maturity assets) of the Principal Regulations.

These Regulations impose no new costs on business.


Notes:

[1] 1996 c. 8. Section 85B(3) and (5) was inserted by paragraph 3 of Schedule 10 to the Finance Act 2004 (c. 12) and paragraph 19B was inserted by paragraph 36 of that Schedule.back

[2] 2002 c.23 Paragraph 17C was inserted by section 52 of, and paragraph 50 of Schedule 10 to, the Finance Act 2004.back

[3] 2005 c. 7.back

[4] S.I. 2004/3271, amended by S.I. 2004/3347.back

[5] Paragraph 19A was inserted by paragraph 36 of Schedule 10 to the Finance Act 2004 and amended by sections 80 and 104 of, and paragraph 31 of Schedule 4 and Part 2(7) of Schedule 11 to the Finance Act 2005.back

[6] 1988 c. 1.back

[7] Section 840A was inserted by paragraph 1(1) of Schedule 77 to the Finance Act 1996 and amended by articles 2(1) and (2), 13 and 46 of S.I. 2001/3629.back

[8] Paragraph 19A(4A) was inserted by section 80 of, and paragraph 31 of Schedule 4 to, the Finance Act 2005.back

[9] Section 92A was inserted by section 74 of the Finance Act 2002 and repealed by section 52 and 326 of, and paragraph 10 of Schedule 10 and Part 2(6) of Schedule 42 to, the Finance Act 2004.back

[10] Paragraph 45L was inserted S.I. 2004/3270.back

[11] S.I. 2004/3256, as amended by 2005/2012.back

[12] 1993 c. 43. Section 92E was substituted by section 52 of, and paragraph 77 of Schedule 10 to, the Finance Act 2004.back



ISBN 0 11 073766 0


 © Crown copyright 2005

Prepared 12 December 2005


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