UK Finance Bill to keep pace with accounting changes
The government has unveiled changes to UK Generally Accepted Accounting Practice in the draft Finance Bill 2012, the legislation that will put into effect measures to be announced in the budget on March 21.
The change will mean that tax legislation dealing with changes of accounting policy apply to the accounting transition adjustments arising because of changes to UK accounting practice.
It will apply to accounts prepared after January 1 2012 and for accounting periods that start before this date. It is not expected to have any impact on the amount of revenue the government collects.
The change has had to be introduced because of an October 2010 announcement from the Accounting Standards Board that it intended to change UK GAAP during 2012. The Treasury explained that the law provides that, in particular circumstances, on a change of accounting policy income is taxed once and expenditure allowed once. The tax law as it stands now would not apply to the accounting transition adjustments arising from the changes to UK GAAP.
“The measure will ensure consistency and fairness across businesses. It will also prevent disadvantage to businesses and protect against Exchequer loss by maintaining the existing policy objective underlying current law. The policy remains that income should be taxed once and the expenditure should be relieved once,” the Treasury said.