• Service: Tax, Global Indirect Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/15/2014

United Kingdom - Corporate debt and derivative contracts, draft regulations  

August 15:  HM Revenue & Customs (HMRC) published draft amendments to the Disregard Regulations 2004 and the Change of Accounting Practice Regulations 2004.

Three sets of draft regulations were issued 7 August 2014 for consultation, and were followed by an accompanying technical note. Comments are requested by 12 September 2014.

The proposed amendments would apply to existing regulations and concern:

  • Elections in relation to the tax treatment of derivatives accounted for at fair value
  • Foreign exchange differences on debt accounted for as permanent as equity
  • Foreign exchange tax matching
  • Transitional relief for distressed debt
  • Updating the statutory references to be consistent with the rewrite of legislation in CTA 2009 and CTA 2010

KPMG observation

While details of the regulations can be expected to be developed via the consultation process and ongoing HMRC work, the proposals generally appear to be a positive development for businesses. Groups may want to consider the proposals in their assessments of the tax implications with respect to their transitions to new GAAP accounting.

Some of the proposals may also be relevant for companies that have already adopted IFRS / new GAAP accounting—e.g., concerning additional opportunities to make elections when the time limit has already expired under existing legislation.

Read an August 2014 report [PDF 751 KB] prepared by the KPMG member firm in the UK: Weekly Tax Matters (15 August 2014)

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