CFM10510 - Currency transactions and accounting: translating currency transactions into sterling – accounts prepared in sterling

Introduction

This guidance describes the post-FA 2002 taxation of loan relationships, derivative contracts and FOREX.

This part of the guidance deals with the question of how companies undertaking transactions in a foreign currency should translate the results of those transactions into sterling for tax purposes. Foreign currency transactions include those undertaken through the medium of a distinct branch or part business that prepares financial statements in a non-sterling currency.

This part of the guidance covers three topics:

• The exchange rate at which companies that account in sterling should translate foreign currency receipts, expenses, assets, liabilities and derivative contracts (see CFM10511).
• Incorporating the business results of a branch or part business that accounts in a foreign currency, into a company's overall sterling corporation tax profit or loss ( CFM10514).
• Incorporating the results of the part business where the company does not have sterling as its reporting currency, in other words where both currency accounting and currency transactions are in point ( CFM10516).

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