Finance Act 2009

9 (1) This paragraph applies where— U.K.

(a) a loss of a company (“the loss”) is required by section 92B or 92C of FA 1993 to be translated from a currency other than sterling (“the original currency”) into its sterling equivalent,

(b) the translation is for the purpose of computing a loss arising in an accounting period beginning before the commencement date, and

(c) the loss is to be a carried-forward amount that is to be carried forward to an accounting period beginning on or after the commencement date.

(2) The translation must be made by taking the following steps—

Step 1: translate the loss into its sterling equivalent by reference to the appropriate exchange rate.

Step 2: translate the loss (as translated under step 1) into the original currency by reference to the spot rate of exchange for the first day of the first accounting period of the company beginning on or after the commencement date.

Step 3: translate the loss (as translated under step 2) into its sterling equivalent in accordance with rule 1, 2 or 3 (whichever is applicable).

(3) Rule 1 applies if the original currency and 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”) are the same.

(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 of FA 1993.

(5) Rule 2 applies if—

(a) the original 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 original 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 of FA 1993.

(9) In this paragraph “the relevant accounting period” means the earliest accounting period of the company beginning after the commencement date in which the operating currency of the company is the later operating currency.