HMRC has launched a technical consultation on draft regulations which will extend the scope of the ‘Disregard regulations’ to cover derivative contracts which hedge foreign exchange risk in relation to anticipated future acquisitions or disposals of substantial shareholdings.
The draft Disregard and Bringing into Account of Profit and Losses on Derivative Contracts Hedging Acquisitions and Disposals of Shares Regulations 2022 will apply to derivative contracts entered into on or after 1 April 2022 to hedge foreign exchange risks on a forecast transaction relating to an anticipated future acquisition or disposal of a substantial shareholding. The profits and losses arising from such derivatives will be disregarded throughout the lifetime of the hedging instrument. For deal-contingent forwards and options, the entire profit and loss on the derivative, including any fees or premiums, will be disregarded.
The principal change will be the insertion of a new reg 5ZA into the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations, SI 2004/3256 – which will exclude relevant amounts from being brought into account.
The Exchange Gains and Losses (Bringing into Account Gains or Losses) Regulations, SI 2002/1970 are amended to bring the disregarded amounts into account on the eventual disposal of the substantial shareholding.
HMRC has launched a technical consultation on draft regulations which will extend the scope of the ‘Disregard regulations’ to cover derivative contracts which hedge foreign exchange risk in relation to anticipated future acquisitions or disposals of substantial shareholdings.
The draft Disregard and Bringing into Account of Profit and Losses on Derivative Contracts Hedging Acquisitions and Disposals of Shares Regulations 2022 will apply to derivative contracts entered into on or after 1 April 2022 to hedge foreign exchange risks on a forecast transaction relating to an anticipated future acquisition or disposal of a substantial shareholding. The profits and losses arising from such derivatives will be disregarded throughout the lifetime of the hedging instrument. For deal-contingent forwards and options, the entire profit and loss on the derivative, including any fees or premiums, will be disregarded.
The principal change will be the insertion of a new reg 5ZA into the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations, SI 2004/3256 – which will exclude relevant amounts from being brought into account.
The Exchange Gains and Losses (Bringing into Account Gains or Losses) Regulations, SI 2002/1970 are amended to bring the disregarded amounts into account on the eventual disposal of the substantial shareholding.
