On the evening of Friday 23 September, HMRC posted on its website a consultations paper relating to the corporation tax issues arising from the adoption of International Financial Reporting Standards. These papers related in particular to the impact of IAS 39, Financial instruments, measurement and the corresponding new UK standard, FRS 26. Companies that have debt or shares listed on an EU exchange must apply one of these standards in their single entity accounts for periods beginning in 2005 and this directly impacts their tax position.
The papers acknowledged that further work was needed to refine regulation 9 of the so-called Disregard Regulations (SI 2004/3256 as amended during 2005), which apply primarily to currency and interest rate swaps. In consequence the deadline for electing that regulation 9 should not apply was to be extended from 1 October to 31 December 2005. Unfortunately the corresponding deadline for electing that regulations 7 and 8, dealing primarily with currency and commodity forward contracts should also not apply was not extended. The Institute considers that this is unreasonable and will force companies to make a difficult decision at extraordinarily short notice with no clarity as to what the effects of their actions will be. The ICAEW considers that this election deadline should also be extended.
See full Press Release and access to consultations paper.
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