2U.K.The following section shall be inserted after section 747 of the Taxes Act 1988—
(1)Subsection (2) below applies where for the purposes of this Chapter a company’s chargeable profits fall to be determined for—
(a)the first relevant accounting period of the company, or
(b)any subsequent accounting period of the company.
(2)Notwithstanding any other rule (whether statutory or otherwise) the chargeable profits for any such period shall be computed and expressed in the currency used in the accounts of the company for its first relevant accounting period.
(3)Subsection (4) below applies where for the purposes of this Chapter a company’s chargeable profits fall to be determined for any accounting period of the company which—
(a)begins on or after the appointed day, and
(b)falls before the company’s first relevant accounting period.
(4)Notwithstanding any other rule (whether statutory or otherwise) the chargeable profits for any such period shall be computed and expressed in the currency used in the accounts of the company for the accounting period concerned.
(5)For the purposes of this section the first relevant accounting period of the company shall be found in accordance with subsections (6) to (8) below.
(6)Where a direction has been given under section 747 as regards an accounting period of the company which begins before its commencement day, its first relevant accounting period is its accounting period which begins on its commencement day.
(7)Where the company is a trading company and subsection (6) above does not apply, its first relevant accounting period is its first accounting period which begins on or after its commencement day and as regards which a direction has been given under section 747.
(8)Where the company is not a trading company and subsection (6) above does not apply, its first relevant accounting period is its first accounting period which begins on or after its commencement day and as regards which—
(a)a direction has been given under section 747, or
(b)it can reasonably be assumed that a direction would have been given under section 747 but for the fact that it pursued, within the meaning of Part I of Schedule 25, an acceptable distribution policy.
(9)For the purposes of this section—
(a)a company’s commencement day is the first day of its first accounting period to begin after the day preceding the appointed day;
(b)the appointed day is such day as may be appointed under section 165(7)(b) of the M1Finance Act 1993 (which relates to exchange gains and losses).
(10)References in this section 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 M2Companies Act 1985 are required by that Act to keep;
and for the purposes of this subsection the home State of a company is the country or territory under whose law the company is incorporated or formed.”