Accounting Principles for Tax Purposes

Accounting Principles for Tax Purposes

This title is written for tax practitioners who wish to gain a better understanding of accounting rules in the UK, how these are applied in different circumstances to a set of financial statements and what the resultant impact on the taxable profit is. The starting basis for tax computation for a business for either income tax or corporation tax is a set of accounts prepared in accordance with financial reporting standards.

HMRC employ a number of accounting specialists who consider whether the accounting treatment in a particular case is correct. While this is particularly prevalent for large companies, it is also a key issue for the smaller business. Accounting flaws will have an impact on the tax treatment and may well give HMRC grounds for discovery assessments.

This book has been organised into five distinct parts. Part I deals with fundamental accounting concepts and the legal and accounting requirements for basic financial statements. In Part II, more detail is provided in relation to specific issues covered by accounting standards. In each of these, the discussion deals only with the accounts of an individual company. The complexities of consolidated accounts for groups of companies are left until Part III, where some more problematic areas are also introduced. Part IV deals with accounting for specialised activities. Finally, Part V deals with some conceptual issues, relating to the current and prospective interweaving of notions of accounting and tax profits.

The most recent update takes into account revisions to UK GAAP (FRS’s 100-105) and IFRS since the last update in 2018, including amendments to FRS 102 and FRS 105 relating to COVID-19 related rent concessions; and further amendments to standards reflecting the UK exit from the EU. The tax commentary has also been bought up to date with Finance Act 2020.

Julia Penny is an highly experienced trainer and writer in accounting and audit field. She has also worked in top 10 and smaller firms of accountants in technical and training roles, and for listed companies providing information and training services to accountants. She is currently ICAEW Vice-President.

The following have been invaluable for their help in reviewing and update the tax content in this title:

Mark McLaughlin

Pete Miller, The Miller Partnership

Satwaki Chanda, Barrister

David Southern, Field Court Tax Chambers

Zeeshan Khilji, ETC Tax