Corporation Tax Act 2009 section 617

Election for section 616 not to apply

Section 617 allows a company to elect out of the section 616 fair value accounting disapplication rules for its derivative contracts, subject to certain exceptions and timing requirements.

• A company may elect that the section 616 disapplication of fair value accounting does not apply to its contracts, covering all of its contracts rather than selected ones
• The election cannot apply to contracts of long-term insurance or to contracts where the embedded derivative's underlying subject matter includes commodities
• The election must be made before the end of the first accounting period in which the conditions in section 616 are met, and once made it is irrevocable
• Section 618 provides further rules about how the election operates where the company is a member of a group of companies