HMRC internal manual

Corporate Finance Manual

CFM84180 - Old rules: derivative contracts: basic rules pre FA 2004: profits, gains and losses

Profits, gains and losses

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

The accounts of the company may show, either in the profit and loss account or reserves

  • credits representing amounts received or receivable by the company under or in connection with the contract, or increases in the value of the contract
  • debits relating to amounts the company has or is liable to pay, or reductions in the value of the contract.

All of these are included in ‘profits, gains and losses’. But the legislation particularly distinguishes ‘charges and expenses’, paid under or in connection with the contract, so that it can describe more specifically what expenses are allowable. (See CFM84210 for amounts taken to or from reserves.)

FA02/SCH26/PARA15(3)(b) makes clear that forward premiums and discounts arising on a currency contract are included in the credits and debits to be brought into account.