Textual Amendments
F1Ss. 92-92E substituted for ss. 92-94AB (with effect in accordance with s. 52(3) of the amending Act) by Finance Act 2004 (c. 12), Sch. 10 para. 77
(1)For the purposes of corporation tax the profits of a company for an accounting period must be computed and expressed in sterling.
(2)The following sections contain further provision as to the application of subsection (1) to certain profits or losses falling to be computed in accordance with generally accepted accounting practice—
section 92A (company operating in sterling and preparing accounts in another currency);
section 92B (company operating in currency other than sterling and preparing accounts in another currency);
section 92C (company preparing accounts in currency other than sterling).
(1)This section applies if, for a period of account, in accordance with generally accepted accounting practice, a company resident in the United Kingdom—
(a)prepares its accounts in a currency other than sterling, and
(b)in those accounts identifies sterling as its functional currency.
(2)Profits or losses of the company for the period that fall to be computed in accordance with generally accepted accounting practice for corporation tax purposes must be computed in sterling as if the company prepared its accounts in sterling.
(1)This section applies if, for a period of account, in accordance with generally accepted accounting practice—
(a)a company resident in the United Kingdom prepares its accounts in one currency,
(b)in those accounts it identifies another currency as its functional currency, and
(c)that currency is not sterling.
(2)Profits or losses of the company for the period that fall to be computed in accordance with generally accepted accounting practice for corporation tax purposes must be computed in sterling by—
(a)computing those profits or losses in the functional currency as if the company prepared its accounts in that currency, and
(b)taking the sterling equivalent of those profits or losses.
(3)Where this section applies, it shall be assumed that any sterling amount mentioned in the Corporation Tax Acts is its equivalent expressed in the functional currency of the company.
(1)This section applies in relation to a company resident in the United Kingdom if, for a period of account—
(a)the company prepares its accounts in a currency other than sterling (the “accounts currency”), and
(b)neither section 92A nor section 92B applies.
(2)This section also applies in relation to a company that is not resident in the United Kingdom if, for a period of account, the company prepares its return of accounts in a currency other than sterling (the “accounts currency”).
(3)Profits or losses of the company for the period that fall to be computed in accordance with generally accepted accounting practice for corporation tax purposes must be computed in sterling by—
(a)computing those profits or losses in the accounts currency, and
(b)taking the sterling equivalent of those profits or losses.
(4)Where this section applies, it shall be assumed that any sterling amount mentioned in the Corporation Tax Acts is its equivalent expressed in the accounts currency of the company.
(1)Where, for the purposes of computing the profits or losses of a company for an accounting period, an amount is required by section 92B or 92C to be translated—
(a)into its sterling equivalent, or
(b)into its equivalent expressed in the functional currency or the accounts currency of the company,
the translation must be made by reference to the appropriate exchange rate.
(2)The “appropriate exchange rate”is—
(a)the average exchange rate for the current accounting period, or
(b)an appropriate spot rate of exchange for the transaction in question.
(1)References in sections 92A to 92C to the “accounts”of a company resident in the United Kingdom are to—
(a)the annual accounts of the company required by Part 7 of the Companies Act 1985 or Part 8 of the Companies (Northern Ireland) Order 1986; or
(b)if the company is not required to prepare such accounts, the accounts which it is required to keep under the law of the country or territory under whose laws the company is incorporated; or
(c)if the company is not so required to keep accounts, such of its accounts as most closely correspond to accounts which it would have been required to prepare if the provisions of Part 7 of the Companies Act 1985 applied to it.
(2)The reference in section 92C to the “return of accounts”of a company not resident in the United Kingdom is to a return of such accounts of its permanent establishment in the United Kingdom as may be required by the Inland Revenue under paragraph 3 of Schedule 18 to the Finance Act 1998 (company tax returns).
(3)References in sections 92A, 92B and 92D to a company’s “functional currency”are to the currency of the primary economic environment in which the company operates.]
Textual Amendments
F2Ss. 92-94 substituted (28.7.2000 with effect as mentioned in 105(2)-(5) of the amending Act) for ss. 92-95 by 2000 c. 17, s. 105(1)
(1)In Schedule 24 to the Taxes Act 1988 (assumptions for calculating chargeable profits, creditable tax and corresponding United Kingdom tax of foreign companies) the following paragraph shall be inserted after paragraph 4—
“4A(1)Sub-paragraph (2) below applies where—
(a)the company carries on a trade, and
(b)the currency used in the accounts of the company for an accounting period is a currency other than sterling.
(2)It shall be assumed that by virtue of regulations under section 93 of the Finance Act 1993 (corporation tax: currency to be used) the basic profits or losses of the trade for the accounting period are to be computed and expressed for the purposes of corporation tax in the currency used in the accounts of the company for the period.
(3)References in this paragraph to the accounts of a company—
(a)are to the accounts which the company is required by the law of its home State to keep, or
(b)if the company is not required by the law of its home State to keep accounts, are to the accounts of the company which most closely correspond to the individual accounts which companies formed and registered under the M1Companies Act 1985 are required by that Act to keep;
and for the purposes of this paragraph the home State of a company is the country or territory under whose law the company is incorporated.
(4)The reference in sub-paragraph (2) above to the basic profits or losses of the trade for the accounting period shall be construed in accordance with section 93 of the Finance Act 1993.”
(2)This section applies in relation to any accounting period beginning on or after the day appointed under section 165(7)(b) below.]