Hedging Proceeds from Future Share Issue: Draft Legislation

On 10 March 2009 the Financial Secretary to the Treasury announced that there would be changes to tax legislation ensuring that any exchange gain or loss on a derivative contract entered into to hedge the future proceeds from a rights issue of shares will be disregarded, consistent with the tax treatment of other types of hedging transactions.

The draft Statutory Instrument relating to derivative contracts that hedge the future proceeds from rights issues of shares is released today along with the accompanying draft explanatory memorandum.

The changes brought about by the draft Statutory Instrument will amend the Loan Relationships and Derivative Contracts (Disregard and Bringing into Account of Profits and Losses) Regulations 2004 (Statutory Instrument 2004/3256).

HM Revenue & Customs would be grateful for any comments on this draft Statutory Instrument (PDF 34K) or on the accompanying explanatory memorandum (PDF 23K) by 21 May 2009. Please contact Aidan Reilly on 020 7147 2575 or Paul Gilham on 020 7147 2619. Alternatively they can be contacted by email at Aidan Reilly or Paul Gilham or you can write to them at the following address:

CT&VAT Specialist Financial
3C/03, 100 Parliament Street
London
SW1A 2BQ