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HMRC internal manual

Corporate Finance Manual

Accounts drawn up in a foreign currency: FA 2009: carrying forward non-sterling losses

Carry forward of non-sterling losses

This guidance applies to accounting periods beginning on or after 29 December 2007

The legislation dealing with carrying forward losses that have been computed in a currency other than sterling are at FA93/S92DB. A translation made under these rules must be made in accordance with one of three rules.

Rule 1

This is the most common circumstance. It applies where the operating currency in the accounting period when the loss arose is the same as the operating currency in the later accounting period when the loss is offset.

Where Rule 1 applies, the loss would be translated into sterling at the same exchange rate as the rate used to translate the profits in the later period.

CFM64400 has an example of Rule 1 in operation.

Rules 2 and 3

Rules 2 and 3 apply where there are non-sterling losses carried forward and the operating currency of the company has changed.

CFM64420 has further details on the rules that apply where there is a change of operating currency.