Corporation Tax Act 2010 section 14

Carried-back amounts

Section 14 deals with the currency translation rules that apply when a company that accounts in sterling carries back a loss to an earlier period in which its tax calculation currency was a non-sterling currency.

• This section applies to UK resident companies that prepare accounts in sterling (or identify sterling as their functional currency) and wish to carry back a loss to an earlier accounting period
• The earlier period to which the loss is carried back must be one in which the company used a non-sterling currency as its tax calculation currency
• The loss must first be translated into the earlier period's tax calculation currency using the spot exchange rate on the last day of the most recent accounting period that used that same non-sterling currency, and then translated back into sterling using the same exchange rate applied to the profit it offsets
• The "relevant accounting period" for the exchange rate is the latest period that both ends before the loss period and used the same non-sterling tax calculation currency