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HMRC internal manual

Corporate Finance Manual

Old rules: derivative contracts: basic rules pre FA 2004: which authorised method?

Which authorised method?

This guidance applies to periods of account beginning before 1 January 2005

FA02/SCH26/PARA18(1) sets out the general rule that the paragraph has effect for deciding which of the methods authorised by FA02/SCH26/PARA17 is to be used.

Different methods may be used for different derivative contracts - for example, financial traders may use mark to market on their dealing accounts, but accruals on their hedging transactions.

It is also possible for different methods to be used on the same derivative contracts for different accounting periods, or parts of the same accounting period. It is not, however, possible in accounting periods beginning before 1 January 2005 to use different methods for different parts of the same contract.