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HMRC internal manual

Corporate Finance Manual

Foreign exchange: matching under the Disregard Regulations: derivative contracts: tax effect

Effect of regulation 4

Where a derivative contract is matched with an asset, the effect of regulation 4 is to disregard exchange gains or losses on the derivative contract, or as much of the derivative contract as is matched.

The disregarded amounts are brought back into charge as a chargeable gain or loss on disposal of the asset. In certain circumstances, the disregarded amounts are not brought back into account at all, 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.