Finance Act 2005

SCHEDULE 4 Accounting practice and related matters

Section 80 Part 1 Bad debts and related matters ICTA 1 In section 74 of ICTA (general rules as to deductions not allowable), omit subsection (1)(j) and subsection (2) (bad debts and related matters). 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FA 1996 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Omit paragraph 6B of Schedule 9 to FA 1996 (impairment losses: companies becoming connected). FA 1997 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule 26 to FA 2002 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Schedule 29 to FA 2002 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part 2 Other provisions connected with accounting practice ICTA 21 In section 43A of ICTA (rent factoring: meaning of “finance agreement”), in subsection (3) (reference to consolidated group accounts), omit paragraphs (a) and (b) and the word “and” preceding paragraph (a). 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 (1) Section 747A of ICTA (special rule requiring chargeable profits of controlled foreign companies to be computed in currency of accounts of company's first relevant accounting period) shall cease to have effect. (2) This amendment has effect in relation to accounting periods beginning on or after 16th March 2005. 25 Section 836A of ICTA (meaning of generally accepted accounting practice) shall cease to have effect. FA 1996 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FA 1997 32 In Schedule 12 to FA 1997 (leasing arrangements: finance leases and loans), in paragraph 30(1) (interpretation) omit the definitions of “consolidated group accounts”, “group of companies” and “member” in relation to a group of companies. CAA 2001 33 In section 219 of CAA 2001 (finance leases), in subsection (3) (reference to group accounts) for paragraph (b) substitute— (b) are drawn up in accordance with generally accepted accounting practice. . Schedule 26 to FA 2002 Schedule 29 to FA 2002 ITEPA 2003 48 In Schedule 5 to ITEPA 2003 (enterprise management incentives), in paragraph 59 (index of defined expressions), in the entry relating to the expression “generally accepted accounting practice”, for “section 836A of ICTA” substitute “ section 50(1) of the Finance Act 2004 ”. FA 2004 49 In section 50 of FA 2004 (generally accepted accounting practice), for subsections (2) and (3) substitute— (2) In the Tax Acts “international accounting standards” has the same meaning as in Regulation (EC) No 1606/2002 of the European Parliament and the Council of 19 July 2002 on the application of international accounting standards. (3) Where the European Commission has in accordance with that Regulation adopted an international accounting standard with modifications, then as regards matters covered by that standard— (a) generally accepted accounting practice with respect to IAS accounts shall be regarded as permitting the use of the standard either with or without the modifications, and (b) accounts prepared on either basis shall be regarded for the purposes of the Tax Acts as prepared in accordance with international accounting standards. . 50 In sections 50(6), 51(6), 52(3) and 54(2) of FA 2004 (periods of account in relation to which the sections have effect), omit paragraph (b) and the word “and” preceding it. This amendment shall be deemed always to have had effect. 51 In Part 4 of Schedule 10 to FA 2004 (amendments relating to foreign currency accounting), after paragraph 78 insert— Transitional provision 79 Where a company carries forward to its first period of account beginning on or after 1st January 2005 an amount by way of— (a) management expenses brought forward under section 75 of the Taxes Act 1988, (b) losses brought forward under section 392B or 393 of that Act, or (c) non-trading deficits on loan relationships brought forward under section 83 of the Finance Act 1996, that amount shall be translated into sterling using the London closing exchange rate for the last day of the previous period of account. . Power to make certain regulations with limited retrospective effect 52 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .