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HMRC internal manual

International Manual

UK residents with foreign income or gains: corporation tax: Loan relationships: conversion to sterling

Foreign tax should be converted into sterling as described in INTM162620. In practice, if a payment of interest accrues over two accounting periods and is properly convertible into sterling at different rates for those accounting periods, those rates may be applied to the appropriate parts of the foreign tax credited or deducted for those years, provided that this basis is applied for all years to all the foreign tax on all the loan relationships of the company.