UITF Abstract 40: Tax body seeks relief for firms

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The Tax Faculty of the Institute of Chartered Accountants in England and Wales (ICAEW) has published a series of Frequently Asked Questions on the tax implications of changes in the way providers of services are required to recognise revenue in their accounts.

The changes arise from 'Urgent Issues Task Force Abstract 40', issued recently by the Accounting Standards Board.

The faculty confirmed that talks are to be held with HM Revenue and Customs in an effort to soften the blow for firms facing an increase in their taxable profits for 2005/06 as a result of the changes, with additional tax payable on 31 January 2007.

A ten-year "spreading relief" applied on the withdrawal of the cash basis for professional firms in 1998. But the faculty said Ministers will need to be convinced that a relief i...

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11th May 2005 12:06

As a matter of principle...
"as a matter of principle there is no difference between the accounting required for long-term contracts and other contracts for services"
I beg to submit that the above extract from Abstract 40 is wrong - yes - in principle!
It all goes wrong from this point on. Contracts for services are many and extremely varied; in fact a contract for services is very different from a Contract for the Construction of a Tangible Fixed Asset.
Please will someone with a bit of clout stand up and tell the UITF that they are wrong and that it should be "as a matter of Practice..."

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09th May 2005 12:21

The only change is that the Revenue are now saying that they will tell each business what WIP to put in the Accounts if they don't like the figure already there.
I don't know why GB just doesn't say :- ok electricians will pay x amount of tax shopkeepers y amount etc. etc. that way we dispense with all the aggravation of compliance and GB knows exactly what he's got coming in every year.

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