Corporation Tax: loan relationships and derivative contracts
HMRC have issued two new discussion papers on the expected changes to the corporation tax rules on loan relationships and derivative contracts.
The changes are a necessary response to changes in accounting standards that the International Accounting Standards Board (IASB) are currently making as part of its project to develop new financial reporting standards for financial instruments.
The first paper is entitled ‘Amendments to the corporation tax rules on loan relationships and derivative contracts arising from the introduction of IFRS 9’ and invites comments on possible changes to the loan relationships and derivative contract legislation necessitated by the IASB’s project to replace IAS 39.
The second paper is entitled ‘Do we need to amend the loan relationships framework for dealing with accounting changes?’. This paper looks at whether there should be a systematic statutory provision for dealing with accounting changes in the future.
The corporation tax rule changes will allow regulations to be made to amend the loan relationships and derivative contracts legislation where necessary. This will become more relevant as the IASB launches new financial reporting standards over the coming years.