Corporation Tax Act 2009 section 676

Transferor using fair value accounting

Section 676 provides the rule that applies when a derivative contract is transferred in a European cross-border transfer of business and the transferor company uses fair value accounting, replacing the normal notional carrying value rule.

• This section overrides the normal notional carrying value rule in section 675 where the transferor uses fair value accounting for the derivative contract
• The transferor must bring into account the fair value of the derivative contract as at the date of transfer to the transferee
• The transferee is treated as having acquired the derivative contract for consideration equal to its fair value at the date of transfer
• This deemed acquisition cost applies for the purpose of calculating all credits and debits on the contract for any accounting period in which the transferee holds it