Regulation 18 Post—commencement net gains and losses and pre—commencement gains and losses

Where this Part applies, there shall be calculated the aggregate amount of the initial exchange gains and losses which have accrued as respects the asset or liability for all accrual periods including the current period, and that aggregate amount is referred to in this Part, if positive, as “the post—commencement net gain” and if negative as “the post—commencement net loss”.

Where the aggregate amount found under paragraph (1) above for all accrual periods including the current period is zero, then—

Where this Part applies, there shall be calculated the aggregate amount of the exchange differences which have accrued as respects the asset or liability for accounting periods before the company’s commencement day, disregarding realised exchange differences and any unrealised exchange difference which has been taken into account in computing the profits or gains of the company for the purposes of corporation tax for any such accounting period, and the result is referred to in this Part, if positive, as “the pre— commencement gain” and if negative as “the pre—commencement loss”.

In any case where the asset or liability is held at the end of the current period for the purposes of a trade or part of a trade the local currency of which is not sterling, that local currency shall be used in making the calculations required by paragraphs (1), (2) and (3) above.

For the purposes of paragraph (1) above, the question whether any initial exchange gain or loss has accrued, and if so its amount, shall be determined disregarding regulations 20 to 22 and the regulation 2(2) provisions.