Value Added Tax Act 1994 section 12

Foreign currency transactions

Section 12 sets out how to convert foreign currency amounts into sterling when valuing goods acquired from an EU member state for VAT purposes.

• When goods are acquired from a member state and the price is in a foreign currency, the amount must be converted into sterling using the market exchange rate available in the UK on the relevant day.
• HMRC may publish notices specifying exchange rates or methods for determining them, and businesses can opt to use these published rates instead of the market rate.
• Once a business opts to use a published rate, the option must apply to all transactions of a particular description or after a particular date, and cannot be withdrawn or varied without HMRC's consent.
• HMRC may also authorise a business, on application, to use a bespoke exchange rate different from any that would otherwise apply, subject to whatever conditions HMRC consider appropriate.