Accounting policy changes: the tax consequences

Article Abstract:

When a company considers changing its accounting methods, it often does not consider the tax consequences, but this should be an important factor in the decision. Court cases, such as Usher's Wiltshire Brewery Ltd. v Bruce and Odeon Associated Theatres Ltd. vs. Jones, show the court's requirements on proper accounting methods. In the Statement of Standard Accounting Principles (SSAP) circumstances when prior year adjustments should be made due to a change of method are: (1) where accounting policy has been changed; (2) when there has been a major error in the previous year's accounts. SSAP 6 states that the accounting method used should not be changed unless it can be proven that the new method is in fact superior and gives a fairer, more accurate picture of the company's finances.

Methods, Accounting

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Where will the line be drawn?

Article Abstract:

The distinction between business plans that have no other purpose but to avoid taxes, and legitimate business plans that are structured to minimize taxes has been blurred by recent UK court cases. Tax avoidance is now defined as a pre-ordained series of transactions that may or may not involve the achievement of a legitimate business end, into which are inserted steps that have no commercial purpose apart from the avoidance of tax liability. It is possible that this interpretation may be further broadened in future court cases.

Laws, regulations and rules, Tax evasion

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PAYE the employers dilemma

Article Abstract:

Guidelines for determining when an employee is or is not an employee for tax purposes are discussed. The auditor's primary concern should be to ensure that the client operates the British payroll tax (PAYE) correctly for all employees. The Institute of Chartered Accountants offers a training video designed to help auditors determine if a client's workers are employees or independent contractors. The Inland Revenue has also issued a booklet for determining workers' status under PAYE.

Taxation, Tax accounting, Self-employed persons, Self employed persons, Withholding tax

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