Section 15 | Carried-forward amounts

(1)This section applies if conditions A, B and C are met.

(2)Condition A is that, in accordance with generally accepted accounting practice, a UK resident company—

(a)prepares its accounts for a period of account in sterling, or

(b)prepares its accounts for a period of account in a currency other than sterling and in those accounts identifies sterling as its functional currency.

(3)Condition B is that a loss of the company for that period (“the loss”) which falls to be calculated in accordance with generally accepted accounting practice for corporation tax purposes is to be a carried-forward amount.

(4)Condition C is that the tax calculation currency of the company in the accounting period to which the loss is to be carried forward (“the later tax calculation currency”) is a currency other than sterling.

(5)The loss must be adjusted by—

(a)first being translated into the later tax calculation currency by reference to the spot rate of exchange for the first day of the relevant accounting period, and

(b)then being translated into sterling by reference to the same rate of exchange as that at which the profit against which the carried-forward amount is to be set off is required to be translated under section 11.

(6)In this section “the relevant accounting period” means the earliest accounting period of the company that both—

(a)begins after the accounting period in which the loss arises, and

(b)is a period in which the tax calculation currency of the company is the currency mentioned in subsection (4).