On 23 January 2014, draft legislation amending the rules for derivative contracts was updated by adding an anti-avoidance provision which disregards debits and credits arising from arrangements to transfer profits between group companies. The publication of the updated draft legislation was followed with an updated guidance note published on 24 January 2014.
The updated legislation addresses various topics including the scope of the provision concerning ordinary commercial arrangements. The legislation includes an amendment to the title of the provisions from “Profit transfer arrangements” to “Disguised distribution arrangements”, and provision for the treatment of tax treatment of debits and credits and periods that straddle 5 December 2013 (the date of the original draft legislation).
