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CTA10/S11

»Ê¹ÚÌåÓýapp basic rule

CTA10/S11 sets out the basic rule to be applied where the profits and losses of a company in a non-sterling currency are to be translated into sterling.

This is the case in particular where:

• A company has a non-sterling presentation currency and a different non-sterling functional or designated currency - S7(2), see CFM64120.
• A company has a non-sterling presentation currency and the same non-sterling functional or designated currency - S8(2) see CFM64130.
• A non-resident company has a non-sterling statement of accounts - S9(2), see CFM64140.

»Ê¹ÚÌåÓýapp translation must be made either at:

• »Ê¹ÚÌåÓýapp average rate for the accounting period;
• In the case of a single transaction, an appropriate spot exchange rate for the transaction; or
• In the case of an amount relating to more than one transaction, a rate of exchange derived on a just and reasonable basis from spot rates.

In most cases an average rate will be appropriate.

Carry back and carry forward of losses

»Ê¹ÚÌåÓýapp basic rule does not apply in relation to the carry back or carry forward of tax losses.

• Further details on how to translate carry back losses into sterling are at CFM64350 to CFM64370.
• Further details on how to translate carry forward losses into sterling are at CFM64380 to CFM64400.

»Ê¹ÚÌåÓýappre are also special rules to deal with the situation when a company has losses that originated in one currency but are offset against profits in an accounting period where those profits are computed in a different currency. CFM64420 has further details.

Similarly, there are special rules to deal with the situation when a company has losses that originated in sterling but are offset against profits in an accounting period where those profits are computed in a non-sterling currency (FA93/S92DC and S92DD). CFM64410 has further details.

Further guidance:

See for the meaning of functional and presentation currency.

See + for the meaning of designated currency.