Finance Act 1993

94Parts of trades

(1)Regulations may make provision under this section as regards a case where in an accounting period—

(a)a company carries on part of a trade in the United Kingdom, and carries on a different part of the trade through an overseas branch or different parts through different overseas branches, or

(b)a company carries on different parts of a trade through different overseas branches;

and “overseas branch” means a branch outside the United Kingdom.

(2)Regulations may provide that the basic profits or losses of different parts of the trade for an accounting period shall for the purposes of corporation tax be computed and expressed in such different currencies as are found in accordance with prescribed rules, in a case where—

(a)prescribed conditions are fulfilled, and

(b)an election is made by the company in accordance with the regulations and has effect for the accounting period concerned by virtue of the regulations.

(3)The regulations must be so framed that—

(a)one currency is used for each part;

(b)at least two currencies are used;

(c)subject to paragraph (b) above, the same currency may be used for more than one part;

(d)if no election is made as regards a particular part, sterling is to be used for that part.

(4)For the purposes of this section the basic profits or losses of part of a trade for an accounting period are all the profits or losses of the part for the period; but this is subject to subsections (5) and (6) below.

(5)No account shall be taken of any trading receipt of the trade in the period, and any trading expense of the trade in the period, that arises by virtue of section 144(2) of the [1990 c. 1.] Capital Allowances Act 1990 (which makes provision about giving effect to allowances and charges).

(6)Where the basic profits or losses of the part of the trade for the period are for the purposes of corporation tax to be computed and expressed in a currency other than sterling, no account shall be taken of any amount mentioned in section 142(4) below and treated as received in respect of the part of the trade and in respect of the period.

(7)Where the basic profits or losses of different parts of a trade for an accounting period are for the purposes of corporation tax to be computed and expressed in two or more different currencies, subsections (8) to (10) below have effect for finding the profits or losses of the trade for the period for the purposes of corporation tax.

(8)Where the basic profits or losses of any part are for the purposes of corporation tax to be computed and expressed in a currency other than sterling—

(a)find the sterling equivalent of their amount expressed in the other currency, then

(b)take account (as provided by section 142 below) of any amount mentioned in section 142(4) and treated as received in respect of the part and in respect of the period, then

(c)call the result the accountable profits or losses of the part for the period.

(9)Where the basic profits or losses of any part are for the purposes of corporation tax to be computed and expressed in sterling, take those profits or losses and call them the accountable profits or losses of the part for the period.

(10)The profits or losses of the trade for the period for the purposes of corporation tax shall then be found by—

(a)taking account of the accountable profits or losses of the different parts for the period, and

(b)then taking account of any trading receipt of the trade in the period, and any trading expense of the trade in the period, that arises by virtue of section 144(2) of the Capital Allowances Act 1990.

(11)For the purposes of subsection (8) above the sterling equivalent of an amount is the sterling equivalent calculated by reference to—

(a)such rate of exchange as is found under prescribed rules, or

(b)if no such rules apply in the case concerned, the London closing exchange rate for the last day of the accounting period concerned.