(1)In applying this Part for corporation tax purposes in relation to a company, disregard tax within subsection (2).
(2)Tax is within this subsection in relation to a company so far as the tax—
(a)is tax under the law of a territory outside the United Kingdom, and
(b)is attributable, on a just and reasonable apportionment, to so much of a notional interest payment as, on such an apportionment, is attributable to a time when the company is not a party to the derivative contract concerned.
(3)For the purposes of this section, a payment is a “notional interest payment” if—
(a)a derivative contract specifies—
(i)a notional principal amount,
(ii)a period, and
(iii)a rate of interest,
(b)the amount of the payment is determined (wholly or mainly) by applying a rate to the specified notional principal amount for the specified period, and
(c)the value of the rate is the same at all times as that of the specified rate of interest.