CFM10513 - Currency transactions and accounting: accounts prepared partly from foreign currency statements

What happens when the company accounts are prepared partly from foreign currency statements

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

FA93/S93Aapplies where:

  • the UK company accounts in sterling but has to include profits from a branch or part of the business that prepares financial statements in a foreign currency, or
  • the UK branch of a non-resident company draws up its branch statements in sterling, but has a part of its business that maintains records and prepares financial statements in a non-sterling currency.

There is a special definition of part of a business in FA93/S94A (8). It includes any collection of assets and liabilities, following the definition of foreign branch in SSAP20 (see CFM8004).

Part of a business therefore goes wider than an overseas branch, or even a separate part of the business carried on in a particular location. For example, it allows a company that accounts for the revenues and expenses from an aircraft in a non-sterling currency, to treat the aircraft as a part business. It also applies to insurance companies operating in the London Market where the operative currency is the US dollar, even though the business is located in and carried on from London.

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