CTM76440 - Local currency accounting (FA93 scheme): election: effective from

Regulation 9 SI1994/3230 provides that an election will normally take effect from the start of an accounting period that begins on or after the date on which the election is made. However, there will be two circumstances in which the election can take effect from an earlier date:

• if a company makes the election within 92 days of its commencement day, the election may take effect from that commencement day,
• if a company makes an election within 92 days of the date it comes within the charge to CT in respect of the trade (or part trade) for which the election is made, the election may take effect from that date.

Where an election is made under Regulation 5(6) SI1994/3230 see CTM76290.

A valid election will remain in force for subsequent accounting periods until the relevant conditions cease to be satisfied. Regulation 10(4) SI1994/3230 provides that the election shall cease to have effect at the end of the accounting period in which the conditions ceased to be satisfied. Regulation 10(5) requires the company to notify the Inspector as soon as is reasonably practicable after it becomes aware that the conditions are no longer satisfied.

Where the relevant conditions cease to be satisfied, and a notice has not been made under Regulation 10(5), the Inspector may notify the company in writing that the election is no longer effective, (Regulation 10(6)).

No special appeal arrangements are provided. Where an election is invalid, profits for the trade (or part trade) for the relevant period should be computed as if sterling were the local currency (see CTM76450). The assessment can then be taken to appeal in the normal way if agreement cannot be reached. The Commissioners can then decide by reference to the relevant evidence what the local currency should be, and hence what is the profit for CT purposes.