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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Derivative contracts: hedging: pre-2015: regulation 9 elections: time limits and effects

This guidance applies to periods of account starting before 1 January 2015. 

Regulations 6(5) and 6(5B): summary of time limits and effects

  Regulation 6(5) election Regulation 6(5B)
     
Time limit Before 31 March 2006, except in the circumstances set out in note 1 below. Before 1 April 2007, except in the circumstances set out in note 1 below.
Fair value hedges of connected party debt (or of preference shares or similar) ‘Appropriate accruals basis’ of regulation 9 applies. ‘Appropriate accruals basis’ of Regulation 9 applies.
Cash flow hedges of connected party debt ‘Appropriate accruals basis’ of regulation 9 applies. Regulation 9A treatment (CFM57420) applies
Undesignated hedges of connected party debt ‘Appropriate accruals basis’ of regulation 9 applies. Regulation 9 applies if company uses fair value accounting for the loan relationship; otherwise normal CTA09/PART7 treatment.
All other cash flow hedges Regulation 9A treatment applies Regulation 9A treatment applies
All other undesignated hedges Normal CTA09/PART7 treatment applies - fair value changes on derivative taxed or relieved Normal CTA09/PART7 treatment applies - fair value changes on derivative taxed or relieved

Note: An election, whether under regulation 6(5) or regulation 6(5B), may be made later if either

  • The company has not adopted fair value accounting for its derivative contracts in a period of account beginning on or after 1 January 2005, but adopts it for a later period; or
  • The company does not have any contracts to which regulation 9 applies in its first period of account beginning on or after 1 January 2005, but acquires such contracts later.

The rules governing time limits in these circumstances are the same as for elections under regulation 6(3) or (3A) - see CFM57370.