CFM9393 - Taxing forex: bringing into account: amounts deferred under Reg 9
Amounts deferred under Regulation 9
Reg 9 deferred the bringing into account of exchange gains or
losses on assets disposed of in a transaction to which TCGA92/S116
or TCGA92/S127 applied.
The amount that would have been brought into account in the
absence of Reg 9 was calculated and deferred until a disposal of
the new holding. On the subsequent disposal of the new holding a
deferred gain would be added to the consideration received. A
deferred loss would be deducted from the consideration received.
A transitional issue arises if the subsequent disposal has
not taken place by the first day of the accounting period to begin
on or after 1 October 2002.
Reg 3 of the 2002 Regulations prescribes when amounts should
be brought into account under REG4 (1), SI2002/1970. It includes,
at Reg 3(3)(c), the disposal of an asset on which there has
been
- a deferred gain or loss under Reg 9 of the 1994 Matching Regulations, and
- an amount has not been brought into account subsequently.
The 2002 Regulations do not specify that the deferred amount is
brought into account as such. Instead the company is required to
calculate the aggregate of all the exchange gains and losses on
liabilities to the extent that those liabilities were matched with
the asset now disposed of. Reg 7(3) ensures that in arriving at the
aggregate, the company must look back through any previous no
gain/no loss disposal to which Reg 9 of the 1994 Regulations
applied.
The 2002 Regulations do not explicitly bring the deferred
amount into account but the aggregate can be calculated by adding
the following:
- the deferred gain or loss under Reg 9 of the 1994 Regulations
- the exchange gain or loss calculated, but not brought into account, on the deemed disposal under Reg 7(1A) of the 1994 Regulations, and
the exchange gains and losses taken to reserves and matched against the asset disposed of in accounting periods beginning on or after 1 October 2002.
