House of Lords written question – answered at on 5 December 2011.
To ask Her Majesty's Government, further to the Written Answer by Lord Sassoon on 16 November (WA 150), whether the Financial Services Authority gives tax credit for credit default swaps acquired when netting down bank gross exposures to a sovereign or private sector borrower and in calculating risk-weighted exposures and capital requirements.
Tax policy is not within the remit of the Financial Services Authority, it is the responsibility of HM Treasury and HM Revenue and Customs. For corporation tax purposes, provided the credit default swap in question falls within the definition of a derivative contract, as is normally the case, any profit or loss on it is taken into account for tax purposes in the same way as it is for any other kind of financial instrument.
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