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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Old rules: forex and accounts drawn up in a foreign currency: overview

Forex pre 2005

CFM60000 sets out the tax rules that apply on foreign exchange transactions. As CFM60010 explains, ‘forex’ was largely assimilated into the loan relationships and derivative contracts rules with effect from 1 October 2002.

Particular provisions that apply to foreign exchange differences on loan relationships and derivative contracts are dealt with at CFM61000, and the key subject to which special rules apply, ‘matching’, is covered at CFM62000.

For periods beginning before 1 January 2005, the existence of ‘authorised accounting methods’ for loan relationships (see CFM80100) had a bearing on the treatment of exchange differences. This is explained at CFM86020.

Accounts drawn up in a foreign currency

The tax rules where accounts are presented in a foreign currency (‘currency accounting’), for period beginning on or after 1 January 2005, are explained at CFM64000. For periods beginning before 1 January 2005, see CFM86100.

Matching: transition from the FA 1993 regime

CFM86300 sets out the rules that applied in order to deal with the transition from the FA 1993 Forex regime to the loan relationship and derivative contract rules after 1 October 2002.

Forex and accounts drawn up in a foreign currency before 1 October 2002

Guidance on the taxation of exchange differences where accounts are presented in a foreign currency in periods covered by the legislation in FA 1993 used to be available in the Company Taxation Manual (CTM70000) but this chapter has been removed. If you require an archive copy please see the instructions at CTM70000.