(12 years, 8 months ago)
Written StatementsThe Government are determined to reduce tax avoidance in order to protect the Exchequer, which provides funding for public services, and maintain fairness for the taxpayer.
Accordingly, the Government are announcing today that regulations have been laid to clarify the time at which companies with foreign currency loan relationships or derivative contracts and matched foreign currency shares, ships or aircraft come within the provisions of the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (the disregard regulations).
These regulations put beyond doubt that companies can only defer foreign exchange gains and losses under the disregard regulations from the date that they have a foreign currency loan relationship or derivative contract which is matched with shares, ships or aircraft. The regulations will apply to shares, ships or aircraft which are matched on or after 6 December 2011.
The clarification follows disclosure of an avoidance scheme in which companies claim to permanently defer foreign exchange gains on foreign currency loan relationships and derivative contracts by retrospectively designating the loan relationship as a hedge of newly acquired foreign currency share capital. The regulations will prevent future avoidance in this area and protect significant amounts of revenue.
Further details have today been published on HMRC’s website, together with the regulations, technical note and tax information and impact note.