CFM15102 - S92 - 94AB FA 1993

Use of currency other than sterling: accounts as a whole etc in foreign currency

FA93/S93 as amended by FA 2002

(1) This section applies where in an accounting period a company carries on a business and the condition in subsection (2) below is fulfilled.

(2) The condition is that-

(a) the accounts of the company as a whole are prepared in a currency other than sterling in accordance with normal accounting practice; and

(b) in the case of a company which is not resident in the United Kingdom, the company makes a return of accounts for its branch in the United Kingdom prepared in such a currency in accordance with such practice.

(4) The profits or losses of the business for an accounting period shall for the purposes of corporation tax be found by-

(a) taking the amount of all the profits and losses of the business for the period computed and expressed in the relevant foreign currency;

(b) taking account of any of the following which are so computed and expressed-

(i) any management expenses brought forward under section 75(3) of the Taxes Act 1988 from an earlier accounting period;
(ii) any losses of the business brought forward under section 392B or 393 of that Act from such a period; and
(iii) any non-trading deficits on loan relationships brought forward under section 83 of the Finance Act 1996 from the previous accounting period; and

(c) taking the sterling equivalent of the amount found by applying paragraphs (a) and (b) above.

(5) In the application of section 578A(2) or (3) of the Taxes Act 1988 or section 43(3), 74(2), 75(1), 76(2), (3) or (4), 99(1), (2) or (3) or 208(1) of the Capital Allowances Act for the purposes of subsection (4)(a) or (b) above, it shall be assumed that any sterling amount mentioned in any of those sections is its equivalent expressed in the relevant foreign currency.

(5) In this section, unless the context otherwise requires-

"accounts", in relation to a company, means-

(a) the annual accounts of the company prepared in accordance with Part VII of the Companies Act 1985 or Part VIII of the Companies (Northern Ireland) Order 1986; or

(b) if the company is not required to prepare such accounts, the accounts which it is required to keep under the law of its home State; or

(c) if the company is not so required to keep accounts, such of its accounts as most closely correspond to accounts which it would have been required to prepare if the provisions of that Part applied to it;

"home State", in relation to a company, means the country or territory under whose laws the company is incorporated;

"losses" has the same meaning as in section 92 above except that it does not include allowable losses within the meaning of the Taxation of Chargeable Gains Act 1992;

"profits" has the same meaning as in section 92 above except that it does not include chargeable gains within the meaning of that Act;

"the relevant foreign currency" means the currency other than sterling or, where the condition in subsection (2) above is fulfilled and two different such currencies are involved, the currency in which the return of accounts is prepared;

"return of accounts", in relation to a branch in the United Kingdom, means a return of such accounts of the branch as may be required by the Inland Revenue under paragraph 3 of Schedule 18 to the Finance Act 1998 (company tax returns, assessments and related matters).