Corporation Tax Act 2009 section 579

The accounting conditions

Section 579 sets out the accounting conditions that a relevant contract must satisfy in order to be treated as a derivative contract for corporation tax purposes.

• A contract meets the accounting conditions if it is treated as a derivative under the relevant accounting standard, or would be if the company applied that standard
• A contract that fails the derivative test only because it requires too large an initial net investment can still qualify if it is treated as a financial asset or financial liability for accounting purposes
• Contracts whose underlying subject matter is commodities automatically qualify, regardless of the type of contract involved
• Contracts for differences based on land, tangible movable property, intangible fixed assets, weather conditions, or creditworthiness also qualify, even if they do not meet the other accounting conditions