This follows a number of announcements over the 2014 and 2015 Budgets in an attempt to clamp down on perceived abuse of the corporate tax system, and government attempts to ‘modernise the corporation tax rules governing the taxation of corporate debt and derivative contracts’.

The amendments to the Change of Accounting Practice Regulations will introduce a specific provision that applies where there is a change of accounting practice to deal with adjustments arising from fluctuations in a company’s credit rating (known as ‘own credit risk’).

One of the areas open to debate in the supporting memorandum refers to ‘when a company's creditworthiness deteriorates, the fair value of its issued debt will decrease (and vice versa). This means that a gain (or loss) has to be recognised in the company’s profit and loss account (?). Under new accounting rules these amounts will in future be recognised in the company’s reserves and therefore not immediately subject to tax’.

Amend