Corporation Tax Act 2009

[F1 328D Counterfactual currency movement assumptions U.K.

(1) This section makes provision for the purposes of section 328A(5) as to the calculation of exchange gains and losses of a company arising in an accounting period of that company.

(2) Where the relevant foreign currency appreciates over the accounting period, or any part of the accounting period, relative to the operating currency of company A by any percentage, the calculation must be made on the assumption that the relevant foreign currency instead depreciates (over the same period and in relation to the same currency) by that percentage.

(3) Where the relevant foreign currency depreciates over the accounting period, or any part of the accounting period, relative to the operating currency of company A by any percentage, the calculation must be made on the assumption that the relevant foreign currency instead appreciates (over the same period and in relation to the same currency) by that percentage.

(4) For provision as to the treatment of certain options for the purposes of the calculation in cases in which subsection (2) or (3) applies, see section 328E.

(5) Except as provided for in that section, the calculation must be made on the basis of transactions in fact entered into (and not on the basis of transactions that would have been entered into on the assumption specified in subsection (2) or (3)).

(6) In this section “ relevant foreign currency ” means—

(a) the currency in which the loan relationships or relevant contracts in respect of which the exchange gains or losses arise are denominated, or

(b) where the exchange gains or losses arise in respect of loan relationships or relevant contracts denominated in more than one currency, any of them.

(7) References in this section to the “operating currency” of a company, in relation to an accounting period, are (subject to subsection (8)) to the currency in which profits or losses of the company arising in that accounting period that fall to be computed in accordance with generally accepted accounting practice for corporation tax purposes are required to be computed by virtue of section 92(1), 92A(2), 92B(2)(a) or 92C(3)(a) of FA 1993 (foreign currency accounting).

(8) In relation to a loan relationship or relevant contract to which a company is deemed to be a party under—

(a) section 381(2) and (3) (loan relationships involving firms), or

(b) section 620(2) (relevant contracts involving firms),

references in this section to the “operating currency” of the company, in relation to an accounting period, are to the currency that would be the operating currency of that firm in that accounting period if that firm were a company.]

Textual Amendments

F1 Ss. 328A-328H inserted (with effect in accordance with Sch. 21 para. 11 of the amending Act) by Finance Act 2009 (c. 10), Sch. 21 para. 3