CG78324 - Foreign currency: foreign currency bank accounts: treatment of withdrawals and debits: position before 6 April 2010

The approach described in CG78323 above, whereby withdrawals from foreign currency bank accounts are part disposals of an asset, was confirmed in November 2009 by HMRC as the correct approach. Before that date we understand that another approach was often used whereby the share identification rules were applied to sums credited to an account in order to identify sums withdrawn with sums credited for the purposes of computing gains and losses. Previous versions of this guidance could have been read as supporting that approach.

The ‘part disposal’ approach described in CG78323 must be adopted for all withdrawals from 2010-11 and 2011-12. For years before 2010-11, when the published guidance could have supported the alternative ‘share identification’ approach, the share identification rules may be used providing

  • it is applied consistently throughout the year in question and in all preceding years
  • it is not a practical proposition for computations to be prepared on the correct basis, or the taxpayer acted on the earlier understanding that HMRC’s considered that share identification rules apply, and
  • for 2008-09 and 2009-10 the revised share identification rules introduced by FA 2008 (see CG51550+) are used.