Finance Bill 2002
Amendments 121-123
Amendment 121 Page: 337 Line: 13
Amendment 122 Page: 337 Line: 18
Amendment 123 Page: 337 Line: 29
Mr Andrew Smith (Labour, Oxford East)
121
Schedule 26, page 337, line 13, leave out second 'or' and insert-
'(aa) so much of any exchange gain or loss arising to a company as results from any translation from one currency to another pursuant to section 93A(4) of the Finance Act 1993 (c. 34) of the profit or loss of part of the company's business and falls within sub-paragraph (5A), or'.
122
Schedule 26, page 337, line 18, at beginning insert 'For the purposes of sub-paragraph (3)(a),'.
123
Schedule 26, page 337, line 29, at end insert-
'(5A) For the purposes of sub-paragraph (3)(aa), an exchange gain or loss falls within this sub-paragraph to the extent that, in accordance with generally accepted accounting practice, an amount representing the whole or part of it is carried to or sustained by a reserve maintained by the company.'.
EXPLANATORY NOTE
SUMMARY
1. The purpose of the amendments is to correct the treatment of exchange gains and losses arising on derivative contracts.
DETAILS OF THE AMENDMENTS
2. The amendments modify paragraph 16 of Schedule 26 to the Bill. That paragraph deals with exchange gains and losses arising on derivative contracts. Amendment 121 inserts a new sub-paragraph (3)(aa) which provides that exchange gains and losses arising where the profit or loss of part of a business is translated from a foreign currency into sterling in accordance with Statement of Standard Accounting Practice 20 using the closing rate/net investment method are disregarded, if they fall within new paragraph 16(5A).
3. Amendment 122 is clarificatory.
4. Amendment 123 inserts a new paragraph 16(5A) which contains the condition that the gains and losses on derivative contracts must be taken to reserve if they are to be disregarded by virtue of sub-paragraph (3)(aa).
BACKGROUND
5. The measures included in the Finance Bill as Schedule 26 represent the outcome of a major consultative process between the Government and representatives of, and advisers to, business. Two Consultative documents and a Technical Note have been produced, and two rounds of draft clauses have been published, most recently on 19 December 2001.