The U.K. government has announced it does not plan to tax in-the-money swaps, which will be moved on to corporates' balance sheet for the first time in January under International Accounting Standards. The announcement, made in the pre-budget report on Dec. 2, follows months of lobbying by corporates (DW, 6/20). Richard Thomas, assistant director in business tax at U.K. tax authority the Inland Revenue, said, "This has been one of the major issues for us."
Corporates publishing accounts under IAS from January next year had been concerned they would be taxed on in-the-money swaps, which are off balance sheet now. Thomas said the government will adopt the proposals of a consulting group set up by the Revenue, which suggests corporate hedging should continue to be taxed in line with old U.K. GAAP. Legislation is expected to follow the pre-budget report in the next few weeks, he added.