Regulation 8 Modification of the Exchange Gains and Losses (Alternative Method of Calculation of Gain or Loss) Regulations 1994

(1)

In regulation 5(6)^f1—

(a)

after “An asset held by a company” insert “which prepares its accounts as a whole in sterling”;

(b)

for sub-paragraph (b)(ii) substitute—

“(ii)

is a company to which section 93 of the 1993 Act applies by virtue of its accounts as a whole being prepared in a currency other than sterling in accordance with normal accounting practice, and”;

(c)

in sub-paragraph (d) for “in a branch” to “other than sterling” substitute “in a branch through which the company carries on a business or part of a business and, by virtue of section 93 of the 1993 Act, the profits and losses of that business or that part are to be computed and expressed in a currency other than sterling”.

(2)

After regulation 5(6) insert—

“(6A)

An asset held by a company which prepares its accounts as a whole in a currency other than sterling is an eligible asset at any time if at that time—

(a)

it is shares which—

(i)

are denominated in a currency other than the relevant foreign currency for the company making the election, and

(ii)

are in a company that is not resident in the United Kingdom and is, at the time the election is made, an associated company of the company making the election; or

(b)

it is shares in a company which—

(i)

is resident in the United Kingdom, and

(ii)

prepares its accounts as a whole either in sterling or in a currency other than sterling which is not the relevant foreign currency for the company making the election, and

(iii)

is a 90 per cent. subsidiary (within the meaning of paragraph (7) below) of the company making the election; or

(c)

it is a debt on a security which under the terms of issue can be converted into or exchanged for shares falling within sub-paragraph (a) or (b) above and which is not a qualifying asset; or

(d)

it is the company’s net investment in a branch through which the company carries on a business or part of a business and, by virtue of section 93 of the 1993 Act, the profits and losses of that business or that part are to be computed and expressed in a currency other than the relevant foreign currency for the company; or

(e)

it is a ship or an aircraft.”.

(3)

For regulation 5(8)(b) substitute—

“(b)

the asset is not a qualifying asset, and

(c)

the asset is held by a branch of the company outside the United Kingdom through which the company carries on a business or part of a business, and

(i)

where the company prepares its accounts as a whole in sterling, the profits and losses of that business or that part are not to be computed and expressed in a currency other than sterling by virtue of section 93 of the 1993 Act, or

(ii)

where the company prepares its accounts as a whole in a currency other than sterling, the profits and losses of that business or that part are not to be computed and expressed in a currency other than the relevant foreign currency for the company by virtue of that section.”.

(4)

In regulation 5(9)—

(a)

for “(6) and (8)” substitute “(6), (6A) and (8)”;

(b)

for “trade” in both places where it occurs substitute “business”.

Annotations

Footnotes

f1: Regulation 5 was amended by S.I. 1996/1347, regulation 4.