Finance Act 1998

Computation of profits of trade, profession or vocation U.K.

42 Computation of profits of trade, profession or vocation. U.K.

(1) For the purposes of Case I or II of Schedule D the profits of a trade, profession or vocation must be computed [F1 in accordance with generally accepted accounting practice], subject to any adjustment required or authorised by law in computing profits for those purposes.

(2) This does not—

(a) require a person to comply with the requirements of the M1 Companies Act 1985 or the M2 Companies (Northern Ireland) Order 1986 except as to the basis of computation, or

(b) impose any requirements as to audit or disclosure.

(3) This section applies to periods of account beginning after 6th April 1999.

A period of account beginning on or before 6th April 1999 which is still current on 7th April 2000 shall be treated for the purposes of this section as having ended on 6th April 1999 and a new period as having begun on 7th April 1999.

F2 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) This section does not affect provisions of the [F3 Corporation Tax Acts] relating to the computation of the profits of Lloyd’s underwriters or companies carrying on life insurance, or otherwise laying down special rules for the computation of the profits of a particular description of business.

Textual Amendments

F1 Words in s. 42(1) substituted (24.7.2002) by 2002 c. 23, s. 103(5)

F2 S. 42(4) repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 500(a), Sch. 3 (with Sch. 2)

F3 Words in s. 42(5) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 500(b) (with Sch. 2)

Modifications etc. (not altering text)

C1 S. 42 excluded (24.7.2002 with application as mentioned in s. 65(1)(3)(4) of the amending Act) by 2002 c. 23, s. 65(2)(b)

Marginal Citations

M1 1985 c. 6.

M2 S.I. 1986/1032 (N.I. 6).

F4 43 Barristers and advocates in early years of practice. U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 S. 43 repealed (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 501, Sch. 3 (with Sch. 2)

F5 44 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.K.

Textual Amendments

F5 S. 44 repealed (24.7.2002 with effect as mentioned in Sch. 40 Pt. 3(8) Note 2 and Sch. 22 paras. 16, 17 of the amending Act) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(8) Note 2

Modifications etc. (not altering text)

C2 S. 44 excluded (24.7.2002) by 2002 c. 23, s. 64(6)

F6 45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.K.

Textual Amendments

F6 S. 45 repealed (24.7.2002) by 2002 c. 23, s. 141, Sch. 40 Pt. 3(16)

46 Minor and consequential provisions about computations. U.K.

(1) In provisions of the [F7 Corporation Tax Acts] relating to the computation of the profits of a trade, profession or vocation references to receipts and expenses are (except where otherwise expressly provided) to any items brought into account as credits or debits in computing such profits.

There is no implication that an amount has been actually received or expended.

(2) Except where otherwise expressly provided, the same rules apply in computing losses of a trade, profession or vocation for [F8 corporation tax purposes] as apply in computing profits.

(3) In the provisions of the Tax Acts which refer to the subject of the charge under Case I or II of Schedule D as “profits or gains” or “profits and gains" of a trade, profession or vocation—

(a) for “profits or gains" or “profits and gains", wherever occurring, substitute “ profits ”, and

(b) for “arising or accruing", in reference to such profits or gains, substitute “ arising ”.

The provisions affected are listed in Schedule 7 to this Act.

Textual Amendments

F7 Words in s. 46(1) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 502(2) (with Sch. 2)

F8 Words in s. 46(2) substituted (6.4.2005) by Income Tax (Trading and Other Income) Act 2005 (c. 5), s. 883(1), Sch. 1 para. 502(3) (with Sch. 2)