The Ball UK Holdings Ltd v The Commissioners for HM Revenue and Customs decision of the Upper Tribunal
The taxpayer has been unsuccessful in its appeal to the Upper Tribunal (UT) regarding whether a change in functional currency used in its statutory accounts was in accordance with UK generally accepted accounting practice (GAAP). The taxpayer had entered into a tax arrangement which involved becoming a party to a derivative contract towards the end of a period which triggered the application of FRS 23 (The Effects of Changes in Foreign Exchange Rates). Applying this standard resulted in a change in the functional currency used to prepare the statutory accounts from GBP to US dollars which generated a foreign exchange loss. The First-tier Tribunal (FTT) had said that the accounts were not in accordance with UK GAAP because the functional currency should have continued to be GBP. The taxpayer appeal to the UT has now been unsuccessful.
In one respect, the decision is only of historic interest because anti-avoidance provisions have been introduced to counteract this type of arrangement. However, the decision is of wider interest because the UT considered the role of the courts in the correct interpretation of accounting standards. Points of interest include:
At the time of writing it is not known whether there will be a further appeal.
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