CFM10500 - Currency transactions and accounting: introduction

Overview

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

This part of the guidance covers companies that prepare their accounts in a foreign currency, or who use books, records and financial statements kept in a foreign currency when they prepare their sterling accounts. At some stage the amounts must be translated into sterling for the purposes of the UK company tax return. This guidance will help you decide when and how to translate the relevant amounts.

You will find a list of the circumstances when such a translation might be needed at CFM10502. If your case falls into one of these categories, you will need to use this part of the guidance.

There is a history of currency accounting at CFM10505+. If you are already familiar with translating currency transactions and accounts into sterling, you can see a summary of the major changes following FA 2002 at CT2200.

You may also find it helpful to look at other parts of the guidance dealing with foreign exchange gains and losses in order to understand the company's perspective when dealing with different currencies. These are:

• Understanding FOREX [ CFM7005]
• Accounting for FOREX [ CFM8000]
• Taxing FOREX [ CFM9000]

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