# The Local Currency Elections Regulations 1994, Regulation 5: Factors affecting determination of local currency


(1) This regulation applies in relation to any election made by a company for the purpose of determining what currency (if any) may be specified in the election.
(2) A currency may be specified in an election as a local currency if, but only if—
(a) it is the currency of the primary economic environment in which the trade or part of the trade is carried on, and
(b) one of the conditions set out in paragraphs (3), (4), (5) and (6) below is satisfied.
(3) A currency may be specified in any election as a local currency if the accounts are prepared in that currency in accordance with normal accountancy practice.
(4) A currency may be specified in an election made by a company resident in the United Kingdom as a local currency if the accounts, so far as they relate to the trade or part in question, are prepared from the financial statements relating to the trade or part using the closing rate/net investment method, and those statements are prepared in that currency.
The reference above to the closing rate/net investment method is a reference to that method as described under the title “Foreign currency translation” in the Statement of Standard Accounting Practice issued in April 1983 by the Institute of Chartered Accountants in England and Wales.
(5) A currency may be specified in an election made by a company not resident in the United Kingdom as a local currency if it is the currency in which the financial statements relating to that trade or part are prepared in accordance with normal accountancy practice.
(6) Subject to paragraph (7) below, a currency may be specified as a local currency in any election which is not for a trade or part of a trade carried on in the United Kingdom if—
(a) the company making the election was within the charge to corporation tax as respects the trade or part in question immediately before its commencement day, and
(b) for accounting periods ending within the two years before that day, the basic profits and losses of the trade or part were computed and expressed for corporation tax purposes in that currency.
(7) An election made by virtue of paragraph (6) above shall be of no effect unless it is made before the expiry of the period of 92 days beginning with the company’s commencement day.

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Source: https://www.legislation.gov.uk/uksi/1994/3230/regulation/5 (the official version)
Page: https://openlegislation.uk/local-currency-elections-regulations-1994/regulation-5
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.