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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Accounts drawn up in a foreign currency: FA 2009: transitional rules: election

Transitional rules: election

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

Any company that would not want its losses to be retranslated back into the currency in which the loss originated can make an election to ensure that this does not happen. There are two consequences of making the election:

  • The transitional rules on losses carried forward or back do not apply (see CFM64440)
  • The date of commencement of these new rules is deferred from the first accounting period beginning on or after 29 December 2007, to the first accounting period beginning on or after 21 July 2009 (the date these provisions obtained Royal Assent)

As the transitional provisions will not apply, any losses brought forward will remain in sterling. As any losses carried forward after the commencement of these provisions will be, in effect, held in the currency of origination, a company will potentially have two sets of losses to carry forward:

  • Pre-FA2009 losses in sterling
  • Post-FA 2009 losses in the currency of origination

Any sterling losses would be offset against future profits of the company after the translation of the profits and losses of the company into sterling.

There are no specific rules for the order of setting off losses in sterling as opposed to losses in the currency that they originated.

Time limit for claim

An election for these provisions must be made within 30 days of the start of the first accounting period beginning on or after 21 July 2009 (the date these provisions obtained Royal Assent).