This guidance describes the post-FA 2002 taxation of loan
relationships, derivative contracts and FOREX.
Cork Industries plc draws up accounts to 30 September each
year.
In the year to 30 September 2002 the FA 1993 rules still
apply. The company elects to defer exchange gains of £18,000
on a long-term bank loan used to raise working capital. The gains
are carried forward at 30 September 2002.
The FA 2002 rules apply to the APE 30 September 2003. The
£18,000 deferred gains are now chargeable under Para 26.
The company has until 30 September 2005 to make an election
to spread the amount forward over 6 APs. It makes this election on
25 September 2004 when it submits its company tax return.
The gains of £18,000 are divided into six equal
instalments of £3,000, brought into account as follows
| APE | £ |
| 30 Sept 2003 | 3,000 |
| 30 Sept 2004 | 3,000 |
| 30 Sept 2005 | 3,000 |
| 30 Sept 2006 | 3,000 |
| 30 Sept 2007 | 3,000 |
| 30 Sept 2008 | 3,000 * |
The company decides to change its accounting date to 30
November for the period ended 30 September 2006. The instalments
become
| APE | £ |
| 30 Sept 2003 | 3,000 |
| 30 Sept 2004 | 3,000 |
| 30 Sept 2005 | 3,000 |
| 30 Sept 2006 | 3,000 |
| 30 Nov 2006 | 3,000 |
| 30 Nov 2007 | 3,000 * |
*The company draws up a set of accounts covering 14 months.
This produces two accounting periods: APE 30 September 2006 and APE
30 November 2006. An instalment of £3,000 is allocated to both
APs including the short AP because the legislation specifies that
an equal instalment is allocated to each of the first 6 APs to
begin on or after 1 October 2002.
