Corporation Tax Act 2009

Amounts recognised in determining a company’s profit or loss

597 Amounts recognised in determining a company’s profit or loss

(1) References in this Part to an amount recognised in determining a company’s profit or loss for a period are to an amount recognised in—

(a) the company’s profit and loss account, income statement or statement of comprehensive income for that period,

(b) the company’s statement of total recognised gains and losses, statement of recognised income and expense, statement of changes in equity or statement of income and retained earnings for that period, or

(c) any other statement of items recognised in calculating the company’s profits and losses for that period.

(2) If, in accordance with generally accepted accounting practice, an amount is shown as a prior period adjustment in any statement within subsection (1), it must be brought into account for the purposes of this Part in calculating the company’s profits and losses for the period to which the statement relates.

(3) Subsection (2) does not apply to an amount recognised for accounting purposes by way of correction of a fundamental error.

598 Regulations about recognised amounts

(1) The Treasury may by regulations make provision—

(a) excluding amounts of a specified description from section 597(1) (amounts recognised in determining a company’s profit or loss),

(b) requiring amounts of a specified description which are not within section 597(1) to be brought into account in determining a company’s profit or loss for a period in specified circumstances, and

(c) as to the way in which any such amounts are to be brought into account.

(2) For the purposes of subsection (1)(b), it does not matter whether the amounts are not within section 597(1) because of regulations under subsection (1)(a) or otherwise.

(3) The regulations may (in particular) make provision by reference to the fact that amounts derive from or otherwise relate to amounts brought into account in a specified way in a previous period of account.

(4) The regulations may—

(a) make different provision for different cases, and

(b) make provision subject to an election or to other specified conditions.

(5) The regulations may apply, exclude or modify any of the provisions of this Part in relation to cases for which provision is made by the regulations.

(6) The regulations may apply to periods of account beginning before they are made, but not earlier than the beginning of the calendar year in which they are made.

599 Meaning of “amounts recognised for accounting purposes”

(1) If a company—

(a) draws up accounts which are not GAAP-compliant accounts, or

(b) does not draw up accounts at all,

this Part applies as if GAAP-compliant accounts had been drawn up.

(2) Accordingly, references in this Part to amounts recognised for accounting purposes include references to the amounts which would have been recognised if GAAP-compliant accounts had been drawn up for the period of account in question and any relevant earlier period.

(3) For this purpose a period of account is relevant to a later period if the accounts for the later period rely to any extent on amounts derived from the earlier period.

(4) In this section “GAAP-compliant accounts” means accounts drawn up in accordance with generally accepted accounting practice.