Taxation (International and Other Provisions) Act 2010 section 371SI

Modification of sections 6 and 7 of CTA 2010

Section 371SI modifies the currency rules in sections 6 and 7 of CTA 2010 so that they can still apply to a controlled foreign company (CFC) that does not prepare its accounts under generally accepted accounting practice (GAAP).

• This section applies where a CFC is assumed to have elected a designated currency under section 9A of CTA 2010, but sections 6 or 7 of CTA 2010 cannot apply because the CFC does not prepare GAAP-compliant accounts.
• Where sterling is the CFC's designated currency, section 6 of CTA 2010 is modified so that the requirement for accounts to be prepared under GAAP is removed from the initial condition but is instead imposed at the stage where profits or losses are calculated.
• Where the CFC's designated currency is a currency other than sterling, section 7 of CTA 2010 is modified in the same way — the GAAP requirement is removed from the initial condition and applied instead at the profit or loss calculation stage.
• The overall effect is to ensure that a CFC which does not prepare GAAP accounts can still use a designated currency, while being required to calculate its profits or losses in accordance with GAAP.