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HMRC internal manual

Corporate Finance Manual

Foreign exchange: matching under the Disregard Regulations: loan relationships: tax effect

Effect of regulation 3

Where a liability is matched with an asset, the effect of regulation 3 is to disregard exchange gains or losses on the liability, or as much of the liability as is matched.

The general rule is that disregarded amounts are brought back into charge as a chargeable gain or loss on disposal of the asset. But in certain circumstances, the disregarded amounts are not brought back, or are brought back as loan relationship credits and debits. The rules at CFM62270 continue to apply for periods beginning on or after 1 January 2005.