Part 16Companies with investment business
Chapter 2Management expenses
Accounting period to which expenses are referable
1224Accounting period to which expenses are referable
(1)
Sections 1225 to 1227 explain which is the accounting period to which expenses of management are referable.
(2)
But those sections do not affect any provision—
(a)
in Chapter 3, or
(b)
elsewhere in the Corporation Tax Acts,
which provides for amounts to be treated as expenses of management referable to an accounting period.
1225Accounts conforming with GAAP
(1)
If—
(a)
expenses of management are debited in accounts drawn up by a company for a period of account,
(b)
the treatment of those expenses in those accounts is in accordance with generally accepted accounting practice, and
(c)
the period of account coincides with an accounting period,
the expenses of management are referable to that accounting period.
(2)
If—
(a)
expenses of management are debited in accounts drawn up by a company for a period of account, and
(b)
the treatment of those expenses in those accounts is in accordance with generally accepted accounting practice, but
(c)
the period of account does not coincide with an accounting period,
the expenses of management are apportioned between any accounting periods that fall within the period of account (and are referable to accounting periods so far as they are apportioned to them).
(3)
An apportionment under subsection (2) must be made in accordance with section 1311 (time basis) or, if it appears that that method would work unreasonably or unjustly, on a just and reasonable basis.
1226Accounts not conforming with GAAP
(1)
Subsection (2) applies if—
(a)
a company incurs expenses of management, and
(b)
the company draws up accounts for a particular period of account, and
(c)
the expenses of management would have been debited in those accounts if they had been treated in those accounts in accordance with generally accepted accounting practice, but
(d)
they are not debited in those accounts in accordance with generally accepted accounting practice.
(2)
The expenses of management are referable to the accounting period to which they would have been referable under section 1225(1) or (2) if they had been debited in those accounts in accordance with generally accepted accounting practice.
1227Accounts not drawn up
(1)
If—
(a)
a company does not draw up accounts, or does not draw them up for a particular period, and
(b)
as a result, expenses of management are not referable to an accounting period under section 1225 or 1226,
take the following steps to determine the accounting period to which they are referable.
(2)
The steps are—
Step 1
Assume that for each accounting period of the company that does not coincide with, or fall within, any period of account there is a period of account that coincides with it.
Step 2
If it would be in accordance with UK generally accepted accounting practice to debit the expenses of management, or any part of them, in accounts drawn up by the company for that deemed period of account, assume that they are so debited.
Step 3
Making those assumptions, apply section 1225(1).