Share this content

accruals basis can hmrc insist on it?

accruals basis can hmrc insist on it?

can HMRC insist that the accruals principle (and hence counting debtors-opening and closing) should apply to sales? or can the income & expenditure account approach still apply if this is the methodology used for the accounts? 


Please login or register to join the discussion.

29th Jan 2013 19:24

My understanding is thus:

Cash basis can be used for property income where gross receipts <£15,000 (PIM1101).


Otherwise, ITTOIA 2005 s.25 (link) states:


Generally accepted accounting practice

(1)The profits of a trade must be calculated in accordance with generally accepted accounting practice, subject to any adjustment required or authorised by law in calculating profits for income tax purposes.
(2)This does not—
(a)require a person to comply with the requirements of the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)) except as to the basis of calculation, or
(b)impose any requirements as to audit or disclosure.
(3)This section is subject to section 160 (barristers and advocates in early years of practice).
(4)This section does not affect provisions of the Income Tax Acts relating to the calculation of the profits of Lloyd's underwriters.


But I'm sure some will proove me wrong...


Thanks (0)
By pedant
29th Jan 2013 21:33

As EASy says

GAAP must be followed.

Otherwise, I'd like to exclude all stock and especially WIP (UITF 40 etc)

Thanks (0)
By Old Greying Accountant
29th Jan 2013 21:46

But ...

... this is supposed to be changing for small companies isn't it?

Thanks (0)
Share this content