Corporation Tax Act 2010 section 6

UK resident company operating in sterling and preparing accounts in another currency

Section 6 requires certain UK resident companies that prepare their accounts in a foreign currency, but whose functional or designated currency is sterling, to calculate their profits or losses in sterling for corporation tax purposes.

• A UK resident company (other than an investment company) that prepares accounts in a foreign currency but identifies sterling as its functional currency must compute its taxable profits or losses in sterling.
• A UK resident investment company that prepares accounts in a foreign currency is also caught if sterling is either its designated currency for the period or, where no designation has been made, its functional currency under accounting standards.
• In both cases, profits or losses for corporation tax purposes must be calculated in sterling, as though the company had prepared its accounts in sterling in the first place.
• The accounts must be prepared in accordance with generally accepted accounting practice (GAAP), and the sterling computation requirement applies to all profits or losses that fall to be calculated under GAAP for corporation tax.