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HMRC internal manual

Corporate Finance Manual

From
HM Revenue & Customs
Updated
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Foreign exchange: accounts drawn up in a foreign currency: losses: amounts brought forward

Amounts brought forward from earlier accounting periods

The treatment of excess losses brought forward for use against the later periods is provided by CTA10/S13, it outlines three rules.

Rule 1: applies if the earlier tax calculation currency is the same as the later tax calculation currency. The loss must be translated into its sterling equivalent by reference to the exchange rate used to calculate the profit against which it is to be set (provided by CTA10/S11).
   
Rule 2: applies if—  
  • the earlier tax calculation currency is not the same as the later tax calculation currency, and
  • the later tax calculation currency is sterling.  The loss must be translated into its sterling equivalent by reference to the spot rate of exchange for the last day of the relevant period.
      Rule 3: applies if—
  • the earlier tax calculation currency is not the same as the later tax calculation currency, and
  • the later tax calculation currency is a currency other than sterling.  The loss must be translated into its sterling equivalent by—
  • being translated into the later tax calculation currency by reference to the spot rate of exchange for the last day of the relevant accounting period, and
  • then being translated into sterling by reference to same rate of exchange as that at which the profit against which the carried forward amount is to be set off (CTA10/S11).