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Accounts adjustments
We have recently had cause to consider the implications of the judgments in Mars UK Ltd v Small [2007] STC 680 and William Grant & Sons Distillers Ltd v HMRC [2007] STC 680 in the context of how a reduction in the value of year-end stock to below cost should be treated for tax purposes.
The stock has been valued in accordance with statement of standard accounting practice 9 and its net realisable value is considered to be less than cost.
An ‘adjustment’ has therefore been made to reduce the cost of the stock down to its net realisable value; and a corresponding charge has been made to the profit and loss account.
Our question is quite simply: does that ‘adjustment’ which is being charged to the profit and loss...
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