SCHEDULES
F1F1SCHEDULE 8
Ascertainment of profits
19
1
The scheme must provide for the preparation of a profit and loss account in respect of—
a
each profit period of the employment unit; and
b
any other period the profits for which must be ascertained for the purposes of this Chapter.
2
The profit and loss account must give a true and fair view of the profit or loss of the employment unit for the period to which it relates.
3
Subject to sub-paragraph (2) above, the requirements of Schedule 4 to the M1Companies Act 1985 shall apply (with any necessary modifications) to a profit and loss account prepared for the purposes of the scheme as they apply to a profit and loss account of a company for a financial year.
4
Notwithstanding the preceding provisions of this paragraph, a profit and loss account prepared for the purposes of the scheme must not make any deduction, in arriving at the profits or losses of the employment unit, for the remuneration of any person excluded from the scheme by virtue of paragraph 7 above.
F24A
In sub-paragraph (4) above “remuneration”, in relation to a person, includes fees and percentages, any sums paid by way of expenses allowance (insofar as those sums are charged to income tax), any contributions paid in respect of him under any pension scheme and the estimated value of any other benefits received by him otherwise than in cash.
5
Notwithstanding the preceding provisions of this paragraph, if the scheme so provides in relation to any of the items listed in sub-paragraph (6) below, a profit and loss account prepared for the purposes of the scheme may, in arriving at the profits or losses of the employment unit—
a
leave the item out of account notwithstanding that Schedule 4 to the Companies Act 1985 requires it to be taken into account; or
b
take the item into account notwithstanding that Schedule 4 to the Companies Act 1985 F7or section 3(3) of the Finance (No. 2) Act 1997 requires it to be left out of account.
6
The items referred to in sub-paragraph (5) above are—
a
interest receivable and similar income;
b
interest payable and similar charges;
c
goodwill;
d
tax on profit or loss on ordinary activities (but not any penalty under the Taxes Acts);
e
research and development costs;
F3f
profit-related pay payable under the scheme, and profit-related pay payable under any other registered scheme if it is one to which paragraph 21 below applies;
ff
secondary Class 1 contributions under Part I of the Social Security Act 1975 or Part I of the Social Security (Northern Ireland) Act 1975 in respect of profit-related pay payable under the scheme;
F8fg
windfall tax charged under Part I of the Finance (No. 2) Act 1997;
g
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
h
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
j
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
k
F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F5l
any exceptional items which fall within sub-paragraph (6A) below and should in accordance with any accounting practices regarded as standard be shown separately on the face of the profit and loss account.
F66A
The items are—
a
profits or losses on the sale or termination of an operation;
b
costs of a fundamental reorganisation or restructuring having a material effect on the nature and focus of the employment unit’s operations;
c
profits or losses on the disposal of fixed assets; and
d
the effect on tax of any of the items mentioned in paragraphs (a) to (c) above.
Sch. 8 repealed (with effect in accordance with s. 61(2)(3), Sch. 18 Pt. 6(3) Notes 1-3 of the repealing Act) by Finance Act 1997 (c. 16), Sch. 18 Pt. 6(3)