Finance Act 2009

Amendments of FA 1993

5 For section 92D (translating amounts into equivalent in different currency) substitute—

“92D Sterling equivalents: the basic rule

(1) This section applies where, for the purposes of computing the profits or losses of a company arising in an accounting period, a profit or loss is required by section 92B or 92C to be translated into its sterling equivalent.

(2) The translation must be made by reference to the appropriate exchange rate.

(3) This section is subject to sections 92DA and 92DB (special rules where translation is for the purpose of computing amounts to be carried back or carried forward to other accounting periods).

92DA Sterling equivalents: carried-back amounts

(1) This section applies where, for the purpose of computing a carried-back amount in respect of a company, a loss (“the loss”) is required by section 92B or 92C to be translated into its sterling equivalent.

(2) The translation must be made in accordance with rule 1, 2 or 3 (whichever is applicable).

(3) Rule 1 applies if the operating currency of the company in the accounting period in which the loss arises (“the later operating currency”) is the same as the operating currency of the company in the accounting period to which the carried-back amount is to be carried back (“the earlier operating currency”).

(4) Rule 1 is that the loss must be translated into its sterling equivalent by reference to the same rate of exchange as that at which the profit against which the carried-back amount is to be set off is required to be translated under section 92D.

(5) Rule 2 applies if—

(a) the later operating currency is not the same as the earlier operating currency, and

(b) the earlier operating currency is sterling.

(6) Rule 2 is that the loss must be translated into its sterling equivalent by reference to the spot rate of exchange for the last day of the relevant accounting period.

(7) Rule 3 applies if—

(a) the later operating currency is not the same as the earlier operating currency, and

(b) the earlier operating currency is a currency other than sterling.

(8) Rule 3 is that the loss must be translated into its sterling equivalent by—

(a) being translated into the earlier operating currency by reference to the spot rate of exchange for the last day of the relevant accounting period, before

(b) being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-back amount is to be set off is required to be translated under section 92D.

(9) In this section “the relevant accounting period” means the latest accounting period of the company before the accounting period in which the loss arises in which the operating currency of the company is the earlier operating currency.

92DB Sterling equivalents: carried-forward amounts

(1) This section applies where, for the purpose of computing a carried-forward amount in respect of a company, a loss (“the loss”) is required by section 92B or 92C to be translated into its sterling equivalent.

(2) The translation must be made in accordance with rule 1, 2 or 3 (whichever is applicable).

(3) Rule 1 applies if the operating currency of the company in the accounting period in which the loss arises (“the earlier operating currency”) is the same as the operating currency of the company in the accounting period to which the carried-forward amount is to be carried forward (“the later operating currency”).

(4) Rule 1 is that the loss must be translated into its sterling equivalent by reference to the same rate of exchange as that at which the profit against which the carried-forward amount is to be set off is required to be translated under section 92D.

(5) Rule 2 applies if—

(a) the earlier operating currency is not the same as the later operating currency, and

(b) the later operating currency is sterling.

(6) Rule 2 is that the loss must be translated into its sterling equivalent by reference to the spot rate of exchange for the first day of the relevant accounting period.

(7) Rule 3 applies if—

(a) the earlier operating currency is not the same as the later operating currency, and

(b) the later operating currency is a currency other than sterling.

(8) Rule 3 is that the loss must be translated into its sterling equivalent by—

(a) being translated into the later operating currency by reference to the spot rate of exchange for the first day of the relevant accounting period, before

(b) being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-forward amount is to be set off is required to be translated under section 92D.

(9) In this section “the relevant accounting period” means the earliest accounting period of the company after the accounting period in which the loss arises in which the operating currency of the company is the later operating currency.

92DC Adjustment of sterling losses: carried-back amounts

(1) This section applies if conditions A to C are met.

(2) Condition A is that, in accordance with generally accepted accounting practice, a company resident in the United Kingdom—

(a) prepares its accounts for a period of account in sterling, or

(b) prepares its accounts for a period of account in a currency other than sterling and in those accounts identifies sterling as its functional currency.

(3) Condition B is that a loss of the company for the period that falls to be computed in accordance with generally accepted accounting practice for corporation tax purposes (“the loss”) is to be a carried-back amount.

(4) Condition C is that the operating currency of the company in the accounting period to which the loss is to be carried back (“the earlier operating currency”) is a currency other than sterling.

(5) The loss must be adjusted by—

(a) being translated into the earlier operating currency by reference to the spot rate of exchange for the last day of the relevant accounting period, before

(b) being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-back amount is to be set off is required to be translated under section 92D.

(6) In this section “the relevant accounting period” means the latest accounting period of the company before the accounting period in which the loss arises in which the operating currency of the company is the earlier operating currency.

92DD Adjustment of sterling losses: carried-forward amounts

(1) This section applies if conditions A to C are met.

(2) Condition A is that, in accordance with generally accepted accounting practice, a company resident in the United Kingdom—

(a) prepares its accounts for a period of account in sterling, or

(b) prepares its accounts for a period of account in a currency other than sterling and in those accounts identifies sterling as its functional currency.

(3) Condition B is that a loss of the company for the period that falls to be computed in accordance with generally accepted accounting practice for corporation tax purposes (“the loss”) is to be a carried-forward amount.

(4) Condition C is that the operating currency of the company in the accounting period to which the loss is to be carried forward (“the later operating currency”) is a currency other than sterling.

(5) The loss must be adjusted by—

(a) being translated into the later operating currency by reference to the spot rate of exchange for the first day of the relevant accounting period, before

(b) being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-forward amount is to be set off is required to be translated under section 92D.

(6) In this section “the relevant accounting period” means the earliest accounting period of the company after the accounting period in which the loss arises in which the operating currency of the company is the later operating currency.

92DE Meaning of “carried-back amount” and “carried-forward amount”

(1) In sections 92DA and 92DC “carried-back amount” means—

(a) an amount carried back under section 393A(1)(b) of the Taxes Act 1988 (trading losses),

(b) an amount carried back by virtue of a claim under section 459(1)(b) of the Corporation Tax Act 2009 (non-trading deficits from loan relationships), or

(c) an amount carried back under section 389(2) of the Corporation Tax Act 2009 (deficits of insurance companies).

(2) In sections 92DB and 92DD “carried-forward amount” means—

(a) an amount carried forward under section 76(12) or (13) of the Taxes Act 1988 (certain expenses of insurance companies),

(b) an amount carried forward under section 392A(2) or (3) of the Taxes Act 1988 (UK property business losses),

(c) an amount carried forward under section 392B(1)(b) of the Taxes Act 1988 (overseas property business losses),

(d) an amount carried forward under section 393(1) of the Taxes Act 1988 (trading losses),

(e) an amount carried forward under section 396(1) of the Taxes Act 1988 (losses from miscellaneous transactions),

(f) an amount carried forward under section 436A(4) of the Taxes Act 1988 (insurance companies: losses from gross roll-up business),

(g) an amount carried forward under section 391(2) of the Corporation Tax Act 2009 (deficits of insurance companies),

(h) an amount carried forward under section 457(3) of the Corporation Tax Act 2009 (non-trading deficits from loan relationships),

(i) an amount carried forward under section 753(3) of the Corporation Tax Act 2009 (non-trading loss on intangible fixed assets),

(j) an amount carried forward under section 925(3) of the Corporation Tax Act 2009 (patent income: relief for expenses), or

(k) an amount carried forward under section 1223 of the Corporation Tax Act 2009 (expenses of management and other amounts).

(3) References in sections 92DB and 92DD to the profit against which a carried-forward amount is to be set off are, in the case of a carried-forward amount to which this subsection applies, to the profit in computing which the amount is deductible, disregarding the deduction.

(4) Subsection (3) applies to a carried-forward amount that is treated as arising in an accounting period later than that in which it in fact arises, and is accordingly deductible in computing a profit for the later period.”