Angela Savin considers whether the decisions in Versteegh and Greene King indicate a move towards HMRC challenging accounts and why this matters to the taxpayer
CTA 2009 s 46 which provides the general obligation to use the company’s accounts as the starting place to determine the taxable profits allows HMRC significant leeway to argue for a departure from the accounting profit. Accounting profit is to be adjusted as ‘required by law’ to ascertain the profits for corporation tax purposes. One obvious adjustment which will be made is to deny deduction of capital expenses. Another example is the treatment of finance lease income before the introduction of the long funding lease regime. The lessor’s accounts would typically treat a finance...
