This guidance describes the post-FA 2002 taxation of loan
relationships, derivative contracts and FOREX.
Most companies incorporated in the UK will draw up their
accounts in sterling. But it is permissible for a company
incorporated in any part of the UK to draw up its accounts in
another currency if to do so would better reflect a true and fair
view of the company's activities - see
CFM7050. This might be the case if, for
example, all of the company's operations were carried on in a
territory where sterling was not the currency.
But CT is not only applicable to UK incorporated companies. A
company incorporated in another jurisdiction might be resident in
the UK as a result of its central control and management being in
the UK. Such a company will normally draw up its accounts in the
currency of its home state.
And non-resident companies trading in the UK through a
branch, agency or permanent establishment will, if they are
incorporated in a territory where sterling is not the currency,
draw up their statutory accounts in a non-sterling currency.
These companies - just like those whose accounts are in
sterling - are required to produce their CT return in sterling.
FA93/S93explains how the profits derived from accounts drawn up in
a currency other than sterling are to be expressed in sterling
terms.
CFM10520+ sets out the relevant
rules.
