Commentary on Sections Overview Overview Section 181: Giving effect to positive and negative adjustments
690.This section sets out the treatment of the adjustment. It is based on paragraphs 4 and 5 of Schedule 22 to FA 2002. The corresponding rule for income tax is in section 228 of ITTOIA.
691.If the adjustment is positive it is treated as a trade receipt; if the adjustment is negative it is treated as a trade expense.
692.In both cases the treatment is the same whether the trade is taxable under Case I or Case V of Schedule D in the source legislation. The adjustment is treated as arising on the first day of the first period of account for which the new basis is adopted. This contrasts with the income tax treatment which is that the adjustment arises on the last day of the period (see sections 232 and 233 of ITTOIA).