»Ê¹ÚÌåÓýapp

Transactions covered by the legislation

This guidance applies to periods of account beginning before 1 January 2005, or beginning after that date and ending before 16 March 2005

»Ê¹ÚÌåÓýapp legislation covers relevant contracts (futures, options or contracts for differences) and associated transactions. »Ê¹ÚÌåÓýapp relevant contracts within the scope of the Para 6 were contracts whose underlying subject matter consisted wholly of

• shares in a company (including an open-ended investment company)
• rights of a unit holder in a unit trust scheme, or
• for accounting periods beginning before 1 January 2005 only, assets representing loan relationships falling within FA96/S92 (convertibles and exchangeable) or FA96/S93 (asset-linked securities where the asset is land or listed shares). »Ê¹ÚÌåÓýappse were securities where any gain was within the CG rules.

»Ê¹ÚÌåÓýappse subject matters can be referred to collectively as Para 6(2) subject matters. When deciding whether the underlying subject matter of a contract consists wholly of Para 6(2) subject matters, Para 6(10) provides that you first apply FA02/SCH26/PARA9 to exclude any ‘smallâ€� or ‘subordinateâ€� matters - see CFM50580.

Contracts must also have satisfied the condition in Para 6(3) in order for the qualification in Para 6 to apply. Either

• the relevant contract was designed by itself to produce a guaranteed return (the single contract case), or
• the relevant contract taken together with any or all of the following associated transactions
  • one or more other contracts whose underlying subject matter consisted of a FA02/SCH26/PARA6(2) subject matter
  • one or more FA96/S92 or 93 securities (or, for accounting periods beginning on or after 1 January 2005, securities that have been bifurcated into a loan relationship and an embedded equity derivative)
  • for accounting periods beginning before 1 January 2005, one or more loan relationships to which FA96/S93A applied (see CFM82470)

  was designed to produce a guaranteed return. CFM83130 explains what is meant by a guaranteed return.

FA02/SCH26/PARA10 described the circumstances in which you could have regarded two or more transactions undertaken by a company as associated transactions - see CFM83150 for details.