Citation and commencement

1. —(1) These Regulations may be cited as the Exchange Gains and Losses (Bringing into Account Gains or Losses) (Amendment) Regulations 2013 and come into force on 12th August 2013.

(2) These Regulations have effect in relation to a disposal of an asset made on or after 1st September 2013.

Amendment to the Exchange Gains and Losses (Bringing into Account Gains or Losses) Regulations 2002

2. —(1)The Exchange Gains and Losses (Bringing into Account Gains or Losses) Regulations 2002( 4 ) are amended as follows.

(2) In regulation 5 (calculation of the amount of any net gain or net loss for the purposes of regulation 4)—

(a) after paragraph (1) insert—

“ (1A) The net gain or net loss must be calculated in the company’s relevant currency at the time of the disposal of the asset. ” ,

(b) after paragraph (2) insert—

“ (2A) Where section 9C of the Corporation Tax Act 2010 (chargeable gains and losses of companies) ( 5 ) applies in relation to the asset disposed of, in determining the amounts representing accrued exchange gains or losses—

(a) exchange gains and losses must be calculated in the relevant currency of the company for the period in which the gains or losses arose,

(b) if there is a change in the company’s relevant currency before the asset is disposed of, the amount of any accrued exchange gains or losses must be translated (or if it has previously been translated under this paragraph, further translated) into the relevant currency of the company immediately following the change by reference to the spot rate of exchange for the day of the change, and

(c) if sub-paragraph (b) applies as a result of more than one change in the company’s relevant currency, it is to be applied in relation to each change in the order the changes were made (with the earliest first). ” , and

(c) at the end insert—

“ (5) Subject to paragraph (6), for the purposes of this regulation and regulation 8, a company’s relevant currency at any time is its functional currency at that time.

(6) If at any time—

(a) a company is a UK resident investment company, and

(b) the company has a designated currency which is different from its functional currency,

the company’s relevant currency at that time is that designated currency.

(7) In this regulation—

“designated currency” means the currency a company elects as its designated currency under section 9A of the Corporation Tax Act 2010 ( 6 ) ;

“functional currency” has the same meaning as in section 17(4) of that Act ( 7 ) ;

“investment company” has the meaning given by section 17(3A) of that Act. ” .

(3) In regulation 8 (no gain/no loss disposals)—

(a) after paragraph (2) insert—

“ (2A) Where section 9C of the Corporation Tax Act 2010 applies in relation to the asset on or before the first relevant disposal, for the purposes of determining the net gain or net loss to be brought into account on the first relevant disposal of the asset—

(a) where the relevant currency of the company disposing of the asset is different from the relevant currency of the company acquiring the asset, the net gain or net loss must be translated into the relevant currency of the company acquiring the asset at the time of the no gain/no loss disposal by reference to the spot rate of exchange at that time,

(b) if there is a change in the acquiring company’s relevant currency before the asset is disposed of, the amount of the net gain or net loss must be translated (or if it has previously been translated under this paragraph, further translated) into the relevant currency of the company immediately following the change by reference to the spot rate of exchange for the day of the change,

(c) if sub-paragraph (b) applies as a result of more than one change in the company’s relevant currency, it is to be applied in relation to each change in the order the changes were made (with the earliest first), and

(d) sub-paragraphs (a) and (b) apply in relation to each no gain/no loss disposal of the asset before the first relevant disposal of the asset. ” , and

(b) in paragraph (3), for “paragraph (2) above” substitute “this regulation”.