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foreign exchange gain on translation of

foreign currency bank account closing balance - taxable?

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If a company has a bank account in euros and there is a large fx gain (around £50k) arising from translation of closing balance at closing fx rate, is the gain taxable for corporation tax? i can see the logic in that if the company converted the currency into £ it would realise that gain and looked up the FRS102 but i just wanted to confirm my understanding as i havent dealt with such big gains before and has a massive impact on tax. transactions in that account are recorded using spot rates. thanks.

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By Wilson Philips
29th Jul 2021 15:19


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By David Ex
29th Jul 2021 15:24

Is this the first year they had a € account?

Why are they holding such a large € “position”?

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By thevaliant
30th Jul 2021 09:20

Regrettably yes.

Usual comic story:
Client - large Euro balance in May 2016 (really large). Accounts in sterling.
May 2017 comes along, massive gain... can't think why....; partner recommends accounts are prepared in Euros (ie, change the functional currency to Euros) to avoid gain.

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Replying to thevaliant:
By Hugo Fair
30th Jul 2021 11:06

I'm confused ... have you been peeking over neanderthal's shoulder at his client's papers?

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