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HMRC internal manual

Corporate Finance Manual

Foreign exchange: accounts drawn up in a foreign currency: designated currency election: revocation

Revocation of an election

Where an investment company makes a designated currency election under CTA10/S9A, from a specified date (CFM64510) the election will have effect until the earlier of either the date on which another election takes effect or the date on which a ‘revocation event’ occurs.

A revocation event occurs where condition A and condition B (CFM64520) are no longer met.

Revocation event for a newly incorporated company

In the case of a newly incorporated company, a revocation event will only occur in its first period of account where at the start of its first accounting period a significant proportion of its assets and liabilities are denominated in the designated currency (condition A) and the consolidation condition (condition B) in CTA10/S9A(5) is not met but where any time during the first period of account circumstances change such that condition A is no longer met.

Result of revocation

Where a revocation event occurs, and the investment company does not make a new election under CTA10/S9A the investment company’s functional currency for tax purposes will revert to that disclosed in its accounts.