Accounting enquiries

KEY POINTS

• Inspectors are challenging accounting decisions.
• FRS 18 has downgraded prudence except when conditions are uncertain.
• HMRC accountants should always be involved in reviewing accounting treatment challenges.

I feel a fraud writing an article in the hallowed pages of Taxation. I lecture for LexisNexis on accounting and auditing; what do I know about tax?

However in 2002 accounts used as the basis for tax computations were required to follow Generally Accepted Accounting Practice (GAAP).

Since then I have been bombarded with questions and 'war stories' from delegates on courses. A real example of one of my delegates' war stories is described below (the names have been changed to preserve confidentiality).

Expense recognition

Johnson Ltd is a small privately owned tour operator. The company trades in a specialist market and produces its 2004 brochure in the summer of 2003 at a...