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Applying FRS 23: Lessons from the Ball UK Holdings case

Alison Ring examines the implications of the First-tier Tribunal outcome in Ball UK Holdings v HMRC ( By All Accounts, January 2018)

The release of the tax tribunal decision on Ball UK Holdings v HMRC (TC/2014/04397) in June 2017 will have undoubtedly sparked interest in the accountancy profession, since the subject matter of the appeal relates purely to the application of an accounting standard, specifically FRS 23 The Effects of Changes in Foreign Exchange Rates.

The precise issue for consideration by the First-tier Tribunal (FTT) was whether it was in accordance with UK Generally Accepted Accounting Practice (GAAP) for Ball UK Holdings to determine its functional currency as US dollars rather than pounds sterling. The FTT considered whether Ball UK Holdings applied FRS 23 correctly. This was said to be a matter of fact on which there was expert accounting evidence from both parties.