Commentary on Sections Overview Chapter 2: Management expenses Section 1225: Accounts conforming with GAAP
3102.This section gives the timing rule in the two most common cases. It is based on section 75A of ICTA.
3103.Subsection (1) deals with the first most common case. The management expenses are “referable to” the accounting period for which accounts are drawn up in accordance with generally accepted accounting practice (“GAAP”). GAAP is defined in section 50(1) of FA 2004.
3104.UK generally accepted accounting practice is defined in section 50(4) of FA 2004.
3105.Subsection (2) deals with the second most common case. GAAP accounts are drawn up. But the period of the accounts does not coincide with the company’s accounting period. The expenses are apportioned.
3106.Subsection (3) sets out the basis of apportionment. It retains the words “it appears that” because they may make the test easier to meet than an apparently objective test (“if the method would work unreasonably …”). But the second “appears” in section 75A(5) of ICTA (“such other method … as appears just and reasonable”) is dropped as it adds nothing. So the wording here is consistent with other “just and reasonable” apportionments in the Act. The same point arises in connection with section 1229(6).