OT20320 - Corporation Tax General

Currency Differences and Section 493. Introduction.

Valuation Section considers the market value of non-arm’s length transactions in terms of dollars, which have then to be converted to sterling, this being the unit of account for tax computational purposes. The Valuation Section does not operate a single basis for currency conversion but agrees different bases with individual companies. The sales disclosed in a company’s accounts can also be dealt with in a number of ways.

The fact that the oil industry is a dollar industry, the effect of exchange differences and the different accounting treatments that companies may adopt are matters not specifically referred to in the original 1975 legislation which was written purely in terms of substituting one figure (the PRT one) for another (the figure in the accounts).