This guidance describes the post-FA 2002 taxation of loan
relationships, derivative contracts and FOREX.
Although the accounts and computations must be in the local
currency, the CTSA return (form CT600) must use sterling
throughout. The CT600 notes tell the company how the entries in
particular boxes should be computed.
The general message is that for losses, or management
expenses, or non-trading deficits brought forward,
If the amount (or a part of it) was found by
computing and expressing it in a currency other than sterling for
the period in which it was incurred,
Then the amount to be entered should be (or
include) the sterling equivalent found by using the same exchange
rate as is used to compute the sterling profits even though the
whole of the loss etc may be carried forward in currency terms.
Where a local currency balance is translated into sterling
for entry on a return, and a year later there is a new balance to
be translated for the next return, there is no need to relate those
sterling figures to each other, or account for any exchange
differences between them. It is the underlying local currency
calculation that is valid for tax purposes, and HMRC staff will not
seek to reconcile the sterling figures mathematically (FA93/S94AB
(4)).
