Can I use average exchange rates if my companys financial year does not coincide with the end of the tax year?
A. No. The HMRC website (see ‘Rates and tables’) gives average exchange rates between various foreign currencies and sterling, including between euro and sterling, for years ending 31 March and 31 December. Arithmetically, you will not get the right answer if you try to apportion the average rates for two successive calendar or tax years. The average rates which you can find on the HMRC website are an average of the daily exchange rates published daily in the Financial Times (the London closing rate for each day). However, you are not obliged to use these rates. Your company’s accountant or bankers should be able to tell you the average exchange rate for the company’s accounting period.
