So, UITF40. What is it good for ?
By now I am sure we all know what this is about. It is the interpretation of the UK Accounting Standards Board of a ruling of the International Accounting Standards Board.
Until a few years ago there were no statutory rules about how to draw up accounts for tax purposes, though the courts had suggested that you should follow "the normal rules of commercial accountancy".
S.42 FA 1998 required that For the purposes of Case I or II of Schedule D the profits of a trade, profession or vocation must be computed on an accounting basis "which gives a true and fair view". Previously, the recourse to accounting practice was purely case law.
FA 2002 s.103(5) changed the phrase "true and fair view" to "in accordance with generally accepted accounting practice".
And S.50 FA...