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HMRC internal manual

Corporate Finance Manual

Old rules: derivative contracts: basic rules pre FA 2004: computing credits and debits

Computing credits and debits

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

A company’s profits and losses on derivative contracts are brought into account in almost exactly the same way as its profits and losses on loan relationships.

FA02/SCH26/PARA15 follows the provisions of FA96/S84 with certain modifications. Unlike Section 84, no mention is made of interest and the description of related transactions is slightly different.

The amounts to be brought into the corporation tax computation, termed ‘credits’ and ‘debits’ following the loan relationships usage, will

  • be brought into account using an authorised accounting method (CFM84010), and
  • fairly represent all profits, gains and losses, both capital and revenue, and charges and expenses

relating to the company’s derivative contracts and related transactions.