The dispute concerns each of the Respondents’ entitlement to set off foreign exchange losses against their liability to corporation tax. The exchanges loss arose as a result of the Respondent companies changing their functional accounting currencies from sterling to US dollars on 23 December 2008 at a time when the only asset on their balance sheets was a very substantial inter-company debt owed to them by their parent company. The debts were denominated in sterling but then had to be converted into dollars when the companies’ accounts were restated in dollars. The next day, the debts were disposed of as part of a group restructuring. The exchange losses arose from the Respondents’ ‘loan relationships’ as that term is used in Chapter 2 of Part IV of the Finance Act 1996 (‘Chapter 2’).
Judges:
Lady Justice Rose
Citations:
[2020] EWCA Civ 299
Links:
Jurisdiction:
England and Wales
Corporation Tax
Updated: 28 October 2022; Ref: scu.648562
