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The Court of Appeal in Union Castle decides that an accounting debit linked to the derecognition of derivative contracts is not a loss ‘arising from’ the derivative contracts for the purposes of corporation tax and, as obiter, that it does not ‘fairly represent’ a loss. HMRC publishes draft guidance on the main tax impacts for businesses of changes to financial instruments in the light of the withdrawal of LIBOR and other benchmark rates. COVID-19 raises some interesting tax implications, such as the impact of travel restrictions on tax residence and permanent establishment and whether lockdown can result in a cessation/change of trade; it also prompts the Stamp Office to (temporarily) accept electronic submission of documents for stamping. HMRC consults on further tweaks to the hybrids rules.
This article was first published in the 8 May 2020 edition of Tax Journal.