Corporation Tax – Loan relationships and derivative contracts
HMRC have published new draft regulations on amendments to the corporation tax rules on loan relationships and derivative contracts arising from the introduction of IFRS 9. The draft regulations have been published as part of a third discussion paper published by HMRC.
The IASB issued IFRS 9 Financial Instruments in November 2009 as part of plans to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring financial assets that must be applied starting 1 January 2013, although early adoption is possible.
The proposed regulations have been drafted to ensure that the definition of a "change of accounting policy" will include the adoption of IFRS 9, and so the change will be taken into account for corporation tax purposes.
The following areas are also addressed as part of the draft regulations:
- the adjustments to be made on a change of accounting policy
- the rules on hybrid and compound instruments
- transitional adjustments under the Change of Accounting Practice Regulations
- other consequential changes