|
| |
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Delayed payments and bad debts |
| |
866 | Delayed payment of employees’ remuneration |
| |
(1) | This subsection applies if— |
| |
(a) | a debit in respect of employees’ remuneration is recognised by a |
| |
company for accounting purposes, and |
| 5 |
(b) | apart from this section, a debit in respect of the remuneration could be |
| |
brought into account for the purposes of this Part for the period of |
| |
account in which the debit is recognised. |
| |
(2) | No such debit may be so brought into account unless the remuneration is paid |
| |
before the end of the period of 9 months beginning with the end of the period |
| 10 |
| |
(3) | If the remuneration is paid after the end of the 9 month period, the debit may |
| |
be brought into account for the purposes of this Part for the period of account |
| |
| |
(4) | Section 867 makes further provision relating to the application of this section. |
| 15 |
867 | Provisions supplementing section 866 |
| |
(1) | For the purposes of section 866 a debit in respect of employees’ remuneration |
| |
recognised for accounting purposes includes an amount reserved in the |
| |
accounts of an employer with a view to its becoming employees’ |
| |
| 20 |
(2) | For the purposes of section 866 it does not matter if the debit is in respect of— |
| |
(a) | particular employments, or |
| |
(b) | employments generally. |
| |
(3) | Any adjustment required by section 866 of an accounting debit that is partly |
| |
referable to an amount to which that section applies and partly to other matters |
| 25 |
must be made on a just and reasonable basis. |
| |
(4) | In making a calculation for tax purposes that has to be made before the end of |
| |
the 9 month period mentioned in section 866(2), it must be assumed that any |
| |
remuneration which is unpaid when the calculation is made will not be paid |
| |
before the end of that period. |
| 30 |
(5) | But if the remuneration is subsequently paid before the end of the period, |
| |
nothing in subsection (4) prevents the calculation being revised and any tax |
| |
return being amended accordingly. |
| |
(6) | For the purposes of section 866 and this section, remuneration is paid when it— |
| |
(a) | is treated as received by an employee for the purposes of ITEPA 2003 |
| 35 |
by section 18 or 19 of that Act (receipt of money and non-money |
| |
| |
(b) | would be so treated if it were not exempt income. |
| |
(7) | In section 866 and this section— |
| |
“employee” includes an office-holder and so “employment” includes an |
| 40 |
| |
“remuneration” means an amount which is or is treated as earnings for the |
| |
| |
|
| |
|
| |
|
868 | Delayed payment of pension contributions |
| |
(1) | This section applies if— |
| |
(a) | a debit in respect of pension contributions is recognised by a company |
| |
for accounting purposes, and |
| |
(b) | the contributions are not paid until after the end of the period of |
| 5 |
account in which the debit is recognised. |
| |
(2) | The contributions may be brought into account for the purposes of this Part |
| |
| |
(3) | For the purposes of this section “pension contributions” means— |
| |
(a) | sums paid by an employer by way of contributions under a registered |
| 10 |
| |
(b) | sums paid to the trustees or managers of such a scheme that are treated |
| |
as if they were the payment of contributions under the pension scheme |
| |
(see section 199 of FA 2004), or |
| |
(c) | expenses within section 246(3) of FA 2004 (expenditure on benefits |
| 15 |
under employer-financed retirement benefits schemes). |
| |
(4) | Any adjustment required by this section of an accounting debit that is partly |
| |
referable to an amount to which this section applies and partly to other matters |
| |
must be made on a just and reasonable basis. |
| |
| 20 |
(1) | No debit may be brought into account for the purposes of this Part in respect |
| |
of a debt owed to the company, except— |
| |
(a) | by way of impairment loss, or |
| |
(b) | so far as the debt is released as part of a statutory insolvency |
| |
| 25 |
(2) | If a debt is so released, any gain in respect of the release that is brought into |
| |
account for accounting purposes by the debtor is disregarded for the purposes |
| |
| |
(3) | Any other gain in respect of an unpaid debt in respect of an intangible fixed |
| |
asset that is brought into account by the debtor for accounting purposes is |
| 30 |
treated for the purposes of section 721 (receipts recognised as they accrue) as a |
| |
gain in respect of an intangible fixed asset. |
| |
(4) | Any adjustment required by this section of an accounting gain or loss that is |
| |
partly referable to an amount affected by this section and partly to other |
| |
matters must be made on a just and reasonable basis. |
| 35 |
(5) | In this section “debt” includes an obligation or liability that falls to be |
| |
discharged otherwise than by the payment of money. |
| |
Controlled foreign companies |
| |
870 | Assumptions for calculating chargeable profits |
| |
(1) | In calculating the amount mentioned in section 747(6) of ICTA (chargeable |
| 40 |
profits of controlled foreign company), the following assumptions must be |
| |
made when applying this Part. |
| |
|
| |
|
| |
|
(2) | It is assumed that any intangible fixed asset acquired or created by the |
| |
company before the beginning of the first relevant accounting period was |
| |
acquired or created by the company at the beginning of that accounting period |
| |
at a cost equal to its value recognised for accounting purposes at that time. |
| |
(3) | The “first relevant accounting period” is the first accounting period— |
| 5 |
(a) | in respect of which an apportionment under section 747(3) of ICTA falls |
| |
| |
(b) | which is an ADP exempt period. |
| |
(4) | It is assumed that the company— |
| |
(a) | has not claimed any relief under Chapter 7 (roll-over relief in case of |
| 10 |
| |
(b) | made any provisional declaration of entitlement to such relief, |
| |
| and accordingly paragraph 4(1) of Schedule 24 to ICTA (assumption that all |
| |
available reliefs have been claimed) is ignored to that extent. |
| |
(5) | But if notice is given in accordance with paragraph 4(2) of Schedule 24 to ICTA |
| 15 |
requesting that subsection (4) should not apply, it does not apply to such |
| |
claims as are specified in the notice to the extent so specified. |
| |
(6) | Expressions used in this section that are defined for the purposes of Chapter 4 |
| |
of Part 17 of ICTA (controlled foreign companies) have the same meaning in |
| |
| 20 |
(7) | See, in particular, paragraph 1(6) of Schedule 24 to that Act for the meaning of |
| |
| |
(8) | The assumption in subsection (2) does not affect the determination of the |
| |
question whether this Part applies to an asset in accordance with section 882 |
| |
(application of this Part to assets created or acquired on or after 1 April 2002). |
| 25 |
| |
Adjustments on change of accounting policy |
| |
| |
871 | Introduction to Chapter |
| |
(1) | This Chapter applies if— |
| 30 |
(a) | there is a change of accounting policy in drawing up a company’s |
| |
accounts from one period of account to the next, and |
| |
(b) | the approach in each of those periods accords with the law and practice |
| |
applicable in relation to that period. |
| |
| 35 |
(a) | the first of those periods of account is referred to as “the earlier period”, |
| |
| |
(b) | the next is referred to as “the later period”. |
| |
(3) | This Chapter applies, in particular, if— |
| |
(a) | the company prepares accounts for the earlier period in accordance |
| 40 |
with UK generally accepted accounting practice and for the later period |
| |
in accordance with international accounting standards, or |
| |
|
| |
|
| |
|
(b) | the company prepares accounts for the earlier period in accordance |
| |
with international accounting standards and for the later period in |
| |
accordance with UK generally accepted accounting practice. |
| |
Change of policy involving change of value |
| |
872 | Adjustments in respect of change |
| 5 |
(1) | This section and section 873 apply if— |
| |
(a) | as a result of the change of accounting policy there is a difference (“the |
| |
accounting difference”) between— |
| |
(i) | the accounting value of an intangible fixed asset of the company |
| |
at the end of the earlier period, and |
| 10 |
(ii) | the accounting value of that asset at the beginning of the later |
| |
| |
(b) | no election has been made in respect of the asset under section 730 |
| |
(writing down at fixed rate: election for fixed-rate basis). |
| |
(2) | If there is an increase in that value, a corresponding credit must be brought into |
| 15 |
account for tax purposes in the later period. |
| |
(3) | If there is a decrease in that value, a corresponding debit must be brought into |
| |
account for tax purposes in the later period. |
| |
(4) | The amount of the credit or debit is—![equation: cross[string[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)" D"],over[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)times[
char[W],char[D],char[V],char[E]],times[char[A],char[V],char[E]]]]](missing.gif) |
| |
| 20 |
D is the accounting difference, |
| |
WDVE is the tax written-down value of the asset at the end of the earlier |
| |
| |
AVE is the accounting value of the asset at the end of the earlier period. |
| |
(5) | But if subsection (2) applies, the credit must not exceed— |
| 25 |
(a) | the sum of debits brought into account for tax purposes in respect of the |
| |
asset before the later period, less |
| |
(b) | the sum of the credits so brought into account. |
| |
(6) | This section is subject to section 878 (exclusion of credits or debits brought into |
| |
account under other provisions). |
| 30 |
873 | Effect of application of section 872 in later period and subsequently |
| |
(1) | A credit or debit that is required to be brought into account under section 872 |
| |
is treated as arising at the beginning of the later period (“the relevant time”). |
| |
(2) | If a credit is to be brought into account, the tax written-down value of the asset |
| |
at the relevant time is the sum of— |
| 35 |
(a) | the tax written-down value of the asset at the end of the earlier period, |
| |
| |
| |
|
| |
|
| |
|
(3) | If a debit is to be brought into account, the tax written-down value of the asset |
| |
| |
(a) | the tax written-down value of the asset at the end of the earlier period, |
| |
| |
| 5 |
(4) | After the relevant time the cost recognised for tax purposes is the sum of— |
| |
(a) | the tax written-down value given by subsection (2) or (3), and |
| |
(b) | the cost recognised for tax purposes of any subsequent expenditure on |
| |
the asset that is capitalised for accounting purposes. |
| |
(5) | After the relevant time the tax written-down value is determined taking |
| 10 |
account only of subsequent credits and debits. |
| |
Change of policy involving disaggregation |
| |
874 | Original asset not subject to fixed-rate writing down |
| |
(1) | This section and section 875 apply if— |
| |
(a) | the change of accounting policy results in an intangible fixed asset of |
| 15 |
the company that was treated as one asset (“the original asset”) in the |
| |
earlier period being treated as two or more assets (“the resulting |
| |
assets”) in the later period, |
| |
(b) | there is a difference (“the accounting difference”) between— |
| |
(i) | the accounting value of the original asset at the end of the earlier |
| 20 |
| |
(ii) | the sum of the accounting values of the resulting assets at the |
| |
beginning of the later period, |
| |
(c) | no election under section 730 (writing down at fixed rate: election for |
| |
fixed-rate basis) has been or is subsequently made in respect of the |
| 25 |
| |
(d) | no such election is subsequently made in respect of any of the resulting |
| |
| |
(2) | If the accounting difference is an increase, a corresponding credit must be |
| |
brought into account for tax purposes in the later period. |
| 30 |
(3) | If the accounting difference is a decrease, a corresponding debit must be |
| |
brought into account for tax purposes in the later period. |
| |
(4) | The credit or debit is—![equation: cross[(*s11.00sf"Symbol"fV"Regular"V*)string[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)"D"],
over[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)times[char[W],char[D],char[
V],char[E]],times[char[A],char[V],char[E]]]]](missing.gif) |
| |
| |
D is the accounting difference, |
| 35 |
WDVE is the tax written-down value of the original asset at the end of the |
| |
| |
AVE is the accounting value of that asset at the end of that period. |
| |
(5) | But if subsection (2) applies the credit must not exceed— |
| |
(a) | the sum of the debits brought into account for tax purposes in respect |
| 40 |
of the original asset before the later period, less |
| |
|
| |
|
| |
|
(b) | the sum of the credits so brought into account. |
| |
(6) | This section is subject to section 878 (exclusion of credits or debits brought into |
| |
account under other provisions). |
| |
875 | Effect of application of section 874 in later period and subsequently |
| |
(1) | A credit or debit that is required to be brought into account under section 874 |
| 5 |
is treated as arising at the beginning of the later period (“the relevant time”). |
| |
(2) | If section 874(2) applies, the tax written-down value of each resulting asset at |
| |
the relevant time is—![equation: cross[(*s11.00sf"Symbol"fV"Regular"V*)id[plus[times[char[W],char[D],char[V],char[
E]],char[C]]],over[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)times[char[
A],char[V]],string[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)"TAV"]]]](missing.gif) |
| |
| |
WDVE is the tax written-down value of the original asset at the end of the |
| 10 |
| |
| |
AV is the accounting value of the resulting asset in question at the |
| |
| |
TAV is the sum of the accounting values of all the resulting assets at the |
| 15 |
| |
(3) | If section 874(3) applies, the tax written-down value of each resulting asset at |
| |
the relevant time is—![equation: cross[(*s11.00sf"Symbol"fV"Regular"V*)id[plus[times[char[W],char[D],char[V],char[
E]],minus[char[D]]]],over[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)times[
char[A],char[V]],string[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)"TAV"]]]](missing.gif) |
| |
| |
WDVE, AV and TAV have the same meaning as in subsection (2), and |
| 20 |
| |
(4) | After the relevant time the cost recognised for tax purposes for each resulting |
| |
asset is taken to be the sum of— |
| |
(a) | the tax written-down value given by subsection (2) or, as the case may |
| |
| 25 |
(b) | the cost recognised for tax purposes of any subsequent expenditure on |
| |
the asset that is capitalised for accounting purposes. |
| |
(5) | After the relevant time the tax written-down value for each resulting asset is |
| |
determined taking account only of subsequent credits and debits. |
| |
876 | Original asset subject to fixed-rate writing down |
| 30 |
(1) | This section applies if— |
| |
(a) | the change of accounting policy results in an intangible fixed asset of |
| |
the company that was treated as one asset (“the original asset”) in the |
| |
earlier period being treated as two or more assets (“the resulting |
| |
assets”) in the later period, and |
| 35 |
(b) | an election under section 730 (writing down at fixed rate: election for |
| |
fixed-rate basis) has been or is subsequently made in respect of the |
| |
| |
|
| |
|
| |
|
(2) | That election has effect— |
| |
(a) | in relation to the original asset, for periods up to and including the |
| |
| |
(b) | in relation to each of the resulting assets, for the later period and |
| |
| 5 |
(3) | The tax written-down value of each resulting asset at the beginning of the later |
| |
period (“the relevant time”) is—![equation: cross[times[char[W],char[D],char[V],char[E]],over[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)times[
char[A],char[V],char[L]],string[(*s11.00sf"Book Antiqua Parliamentary"fV"Regular"V*)"TAVL"]]]](missing.gif) |
| |
| |
WDVE is the tax written-down value of the original asset at the end of the |
| |
| 10 |
AVL is the accounting value of the asset in question at the beginning of |
| |
| |
TAVL is the sum of the accounting values of all the resulting assets at the |
| |
beginning of that period. |
| |
(4) | After the relevant time the cost recognised for tax purposes for each resulting |
| 15 |
| |
(a) | the tax written-down value given by subsection (3), and |
| |
(b) | the cost recognised for tax purposes of any subsequent expenditure on |
| |
the asset that is capitalised for accounting purposes. |
| |
(5) | After the relevant time the tax written-down value for each resulting asset is |
| 20 |
determined taking account only of subsequent credits and debits. |
| |
877 | Election for fixed-rate writing down in relation to resulting asset |
| |
(1) | This section applies if— |
| |
(a) | the change of accounting policy results in an intangible fixed asset of |
| |
the company that was treated as one asset (“the original undivided |
| 25 |
asset”) in the earlier period being treated as two or more assets (“the |
| |
resulting assets”) in the later period, and |
| |
(b) | no election under section 730 (writing down at fixed rate: election for |
| |
fixed-rate basis) has been or is subsequently made in respect of the |
| |
original undivided asset. |
| 30 |
(2) | An election under that section may be made in respect of any of the resulting |
| |
| |
(3) | But such an election may be made only within the period during which such |
| |
an election could have been made in relation to the original undivided asset. |
| |
(4) | The effect of the election is that— |
| 35 |
(a) | the original undivided asset is treated as if it had at all material times |
| |
consisted of as many assets (“notional original assets”) as there are |
| |
| |
(b) | each notional original asset is taken to be the same asset as one of the |
| |
resulting assets (its “corresponding resulting asset”), |
| 40 |
(c) | the appropriate proportion of every amount falling to be taken into |
| |
account in relation to the original undivided asset is attributed to each |
| |
of the notional original assets, and |
| |
|
| |
|