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HMRC internal manual

Corporate Finance Manual

Old rules: forex and accounts drawn up in a foreign currency: pre 2005: accounts wholly in a foreign currency

Companies drawing up foreign currency accounts

This guidance applies for accounting periods between 1 October 2002 and 1 January 2005

FA93/S93(2) deals with the cases where profits and losses of a business are computed initially in a foreign currency and then expressed in sterling. They are where:

  • a UK-resident company draws up accounts in a foreign currency in accordance with normal accounting practise.
  • a company is not resident in the UK, but has a UK branch which makes a return of accounts in a non-sterling currency. The non-sterling currency in which it draws up the return of accounts will usually be the company’s reporting currency, but it doesn’t have to be

In such cases the accounts or return of accounts will be wholly drawn up in the foreign currency.

Return of accounts means the foreign currency financial statements which the UK branch of a non-resident company submits with its tax return in order to comply with FA98/SCH18/PARA3. In some cases, of course, non-resident companies have UK branches that operate relatively independently of the parent company and keep books and prepare financial statements in sterling. Such branches will simply submit a return of accounts in sterling and are therefore unaffected by provisions for accounts drawn up in a foreign currency.