CTA09/S609

If an in-the-money derivative contract is transferred between two group companies, and CTA09/S625 applies, its effect will be that the accounting profit shown by the transferor company is not brought into account for tax purposes. The normal operation of the rules ensures that this ‘deferred’ profit is brought into account when the contract terminates, or there is a disposal outside the group. But various avoidance schemes have sought to exploit the mismatch between the accounts and the tax position by contriving that the ‘deferred’ profit is never brought into account by the group.

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