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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Accounts drawn up in a foreign currency: FA 2009: change in operating currency: overview

Change in operating currency: overview

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

As companies can change their operating currency, it is possible that losses incurred while the company had a sterling operating currency may be utilised against profits in earlier or later accounting periods while the company has a non-sterling operating currency.

The rules at FA93/S92DC and S92DD deal with this problem by converting the sterling losses into the operating currency in the period in which the loss is being offset at the point at which the change in operating currency takes place. This converted loss is then translated back into sterling at the same rate as the profits against which that loss is being utilised. Consequently, the exchange risk on the value of the losses is removed by ensuring that the currency of the losses always matches the operating currency of the company. This process may sound slightly complicated but is, in practice, quite simple.

CFM64420 has further detail on how to deal with changes in operating currency.