Tax consequences of deferred income
stefanboro
Registered Posts: 187 Dedicated contributor 🦉
This is a bit technical.
I know perfectly well how to account for deferred income - when you make a sale:
Dr Debtors (BAL SHEET ASSET)
Cr Deferred Income (BAL SHEET LIABILITY)
Then over the relevant time period leak the amount into the profit and loss:
Dr Deferred Income (BAL SHEET LIABILITY)
Cr Sales (PNL)
Fine and dandy.
Can anyone then point me in the direction to find the tax restrictions of this sort of accounting treatment. I am looking in BIM31000 but nothing jumps out at me.
Many thanks!
I know perfectly well how to account for deferred income - when you make a sale:
Dr Debtors (BAL SHEET ASSET)
Cr Deferred Income (BAL SHEET LIABILITY)
Then over the relevant time period leak the amount into the profit and loss:
Dr Deferred Income (BAL SHEET LIABILITY)
Cr Sales (PNL)
Fine and dandy.
Can anyone then point me in the direction to find the tax restrictions of this sort of accounting treatment. I am looking in BIM31000 but nothing jumps out at me.
Many thanks!
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Comments
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I don't know the chapter and verse, but my understanding is that if the general accruals concept is applied to income, such as deferred income, the tax treatment usually follows the accounting treatment.
Illustrated here
http://www.hmrc.gov.uk/manuals/bimmanual/BIM31090.htm
Do you have a specific scenario that differs from a "bog standard" deferred income situation?0 -
I'm with Monsoon.
Thought it was just taxed as normal in the year it takes place.0
