Bristol & West and derivative contracts

The case of Bristol & West concerned an attempt by a bank to take advantage of the derivative contract group transfer rules to avoid corporation tax by transferring a swap contract to another company in the same banking group. The decision of the FTT tells us that: to qualify for a relief, one must ensure the taxpayer or taxpayers are capable of satisfying all aspects of the legislation providing for the relief; FA 2002 Sch 26 para 28 did not operate to relieve one member of the corporate group within the FA 2002 derivative contract regime, where the other member was not yet within the Sch 26 regime; a closure notice issued in error may not have any effect, depending on the circumstances; and having the correct accounting treatment is fundamental to getting the correct tax treatment.