The Exchange Gains and Losses (Excess Gains and Losses) Regulations 1994

Explanatory Note

(This note is not part of the Order)

These Regulations, which come into force on 23rd March 1995, make provision for amounts to be treated as exchange gains and losses in certain circumstances.

Regulation 1 provides for citation, commencement and interpretation.

Regulation 2 provides that where exchange gains have accrued as regards an asset or liability, and a non-exchange loss accrues when the company ceases to be entitled to all or part of the asset or liability, the company may claim that an initial exchange loss should be treated as arising equal in amount to:

• the excess of exchange gains which have been taken into account as regards the asset or liability over exchange losses which have been taken into account as regards the asset or liability, or

• if lower, the amount of the non-exchange loss.

Similarly, where exchange losses have accrued as regards an asset or liability, and a non-exchange gain accrues when the company ceases to be entitled to all or part of the asset or liability, regulation 2 provides for an initial exchange gain to be treated as arising equal in amount to:

• the excess of exchange losses which have been taken into account as regards the asset or liability over exchange gains which have been taken into account as regards the asset or liability, or

• if lower, the amount of the non-exchange gain.

Regulation 3 provides that if, after relief has been given under regulation 2(1), the amount relieved is recovered, the relief previously allowed is cancelled by deeming an initial exchange gain to arise in the period of recovery.