UK and International Tax news
Tax Rules And Changes To UK GAAP
Friday 13th January 2012
Acceptable accounting policies for computing taxable profits are those contained within International Accounting Standards (IAS) and UK GAAP. The Accounting Standards Board (ASB) announced in October 2010 that it intends to significantly change what constitutes UK GAAP during 2012 and there are a number of areas where the proposed new UK GAAP differs from current UK GAAP which are likely to result in one-off accounting adjustments on transition.
Current tax law governing accounting transition adjustments arising from certain specified changes of accounting policy is included in CTA2009 and ITTOIA2005. The law provides that, in particular circumstances, on a change of accounting policy, income is taxed once and expenditure allowed once. Current tax law however would not apply to the accounting transition adjustments arising from the changes to UK GAAP.
Included in draft legislation for FB2012, announced by the Government on 6 December 2011, are clauses to ensure that the current tax rules dealing with changes of accounting policy apply to the accounting transition adjustments arising as a result of the proposed changes to UK GAAP.
The measure will apply to changes in accounting policy of the businesses concerned where accounts are prepared after 1 January 2012, including those for accounting periods starting before 1 January 2012.
If you would like further details on the above, please contact Keith Rushen on 0044 (0)20 7486 2378.Contact Us