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Foreign currency and gains

The Readers’ Forum query and replies ‘Back in Blighty’ (see Taxation 2 February 2017) implied that a gain on an asset whose sale proceeds were received in a foreign currency could be calculated in that currency and then converted into sterling. Unfortunately the gremlins were at work and we should have said that the sale transaction should be converted into sterling before the gain was calculated. This gain would be calculated by reference to the sterling acquisition cost. Coincidentally we also reported (page 6) the case of G Knight and I Knight (TC5544) in which the First-tier Tribunal confirmed that this was not the case.

Peter Vaines of Field Court Tax Chambers recently commented on the case.

‘The case of Knight v HMRC (TC5544) provides another confirmation of the much misunderstood capital gains tax position when a foreign asset is sold.

‘If I buy a...