UK Ltd acocunting in multiple currencies

[doodab]

This thread may help you: http://forums.contractoruk.com/accou...ice-euros.html

While it's about VAT it will give you a clue of the correct way to do things as you can use the HMRC rate or a tourist rate.

In regards to expenses as people normally use UK bank cards the bank does the exchange rate for you so the 1 or 2 day fluctuation in rate is ignored.

In your case it would depend on how you are submitting the expenses to the client. If they are part of the invoice then it makes sense to use the invoice exchange rate.

The sterling expenses would have to the amount you spent then, as for the Euro expenses I would use the exchange rate when I received the money.

Some expenses will be submitted to the client but the receipts for them (except for the flight and a couple of taxis) are in €, and the invoice is in € and will be paid in €, so I actually need to convert the sterling expenses to € for the invoice, then convert everything back to sterling for the VAT accounting. The VAT guidelines are a bit ambiguous, they say I should use the "market selling rate" but they don't say if that's the rate for selling € or selling £....

It seems that the conversion to sterling for my actual accounts might have to be done at a different rate than the conversion for VAT, at least according to: HM Revenue & Customs: Frequently Asked Questions about the euro - UK companies and Accounting Standards Board - Technical - Standards in Issue - Accounting Standards.

The expenses reimbursed by my company will be paid in sterling and include some things not billed to the client e.g. I will claim the full amount of meals and not just the first €20 that the client will be billed for. I suppose I could just submit the expenses in sterling converted using the rate from the post office or bank or something.

[SueEllen]

This thread may help you: http://forums.contractoruk.com/accou...ice-euros.html

While it's about VAT it will give you a clue of the correct way to do things as you can use the HMRC rate or a tourist rate.

In regards to expenses as people normally use UK bank cards the bank does the exchange rate for you so the 1 or 2 day fluctuation in rate is ignored.

In your case it would depend on how you are submitting the expenses to the client. If they are part of the invoice then it makes sense to use the invoice exchange rate.

The sterling expenses would have to the amount you spent then, as for the Euro expenses I would use the exchange rate when I received the money.

[borderreiver]

Hi,

I'm in much the same situation as you. I am returning to the UK from Austria in the next few months and have set up a UK Ltd; my first clients will also be invoicing me in EUR.

I think what you do from an bookkeeping perspective is to allocate the difference between the nominal GBP amount and what actually appears in your sterling bank account to an "Exchange Rate Gain" income account or an "Exchange Rate Loss" expense account. This is more or less what I have managed to glean from searching the web on this topic.

HtH!
Borderreiver.

[doodab]

Right then.

I have recently returned to the UK and am working through my long established UK Ltd. I have taken on a short contract that will be paid in €, into my personal € account, and then transferred to my companies UK sterling account (this is to allow me to obtain the best possible exchange rate)

I have incurred some expenses, in a mixture of £ and €, these will be billed to the client who will pay them in €.

I have a couple of questions, I will of course have a word with my accountant but I thought I would ask on here to get an idea of what answers I should expect from her.

1. How do I account for the € amounts invoiced and paid in my sterling accounts? I understand I have to convert to sterling at the prevailing exchange rate as defined by HMRC, but how do I account for any differences in the sterling amount invoiced, the sterling amount paid as per HMRC rate and the actual amount that arrives in my companies account?

2. The company will need to reimburse me for out of pocket expenses, however most expenses are denominated in €, how do I go about working out the correct sterling amount to reimburse myself?

Thanks in advance for any help.