CFM64460 - Accounts drawn up in a foreign currency: rates used for translation: FA09 transitional rules: carried back losses

CTA10/SCH2/PARA11

Transitional rules: carried back losses

This guidance applies to accounting periods beginning on or after 29 December 2007, unless an election has been made to defer the start date of the FA09 changes to the first accounting period beginning on or after 21 July 2009, in which case the transitional rules do not apply, see CFM64480.

There were transitional rules that applied where losses that originate in an accounting period when the new rules apply are carried back into a period before the new rules applied.

Where that is the case, the rules at CTA10/S12 did not apply to the loss. Consequently, the loss would be carried back into the earlier period at its sterling equivalent. This ensured that any losses were treated in line with the rules for translating losses that existed in the accounting period during which the loss is offset.

Although the result is that the pre FA09 treatment for losses are applied, those losses would still be translated into sterling in line with the post-FA09 rules for determining the exchange rate to be used at CTA10/S11, see CFM64330.