Section 402 of the Principal Act is amended -

(a) in subsection (2), by the insertion of the following after paragraph (b):

"(c) For the purposes of this subsection, references to an amount of any allowance or charge to be made in taxing a trade shall include a reference to an amount of any allowance or charge to be made by means of discharge or repayment of tax in taxing the leasing activities of a company, where those activities are charged to tax under Case IV of Schedule D and references to a trading expense or receipt shall be construed accordingly.",

(b) by the insertion of the following after subsection (3):

"(4)

(a) Subject to paragraph (b), where a company incurs a loss in an accounting period arising from a leasing activity in respect of which the company is within the charge to corporation tax under Case IV of Schedule D and makes a claim under section 399(1) to set that loss off against the amount of any income arising from such activities in respect of which the company is assessed to corporation tax under that Case for the same or any subsequent accounting period, the amount (which may be nil) of any set-off due to the company against that income in an accounting period shall -

(i) be computed in terms of the company's functional currency by reference to amounts expressed in that currency, and