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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Measuring the profits (general rules): statutory rules: receipts and expenses

S27, S28 Income Tax (Trading and Other Income) Act 2005, S48, S49 Corporation Tax Act 2009

Although the computational rules set out at BIM30510 do not provide for a comprehensive set of rules to cover every possible receipt or item of expenditure, there are statutory rules dealing with the inclusion of some specific receipts in the calculation and the deduction of some specific expenses. The terms ‘receipts’ and ‘expenses’ in the legislation are used simply to refer to any items brought into account as credits or debits in calculating the profits and there is no implication intended that a particular receipt or expense must have actually been received or paid before it can be brought into account. For guidance on the timing of when receipts are to be included in trade profits, and when deductions are to be allowed, see BIM40075 and BIM42200 onwards respectively.

For guidance on receipts generally see BIM40050 onwards and for guidance on deduction of expenses see BIM42200 onwards. The exclusion of capital items, both receipts and expenditure, is discussed at BIM35000 onwards and the prohibition on the deduction of expenditure not incurred wholly and exclusively for the purposes of the trade is covered at BIM37000 onwards.

Trading receipts or expenses may also arise under the following sets of rules which are not covered in the Business Income Manual.

  Where to find guidance
Capital Allowances Capital Allowances Manual
Rules for companies about loan relationships, foreign exchange (FOREX) and derivative contracts Corporate Finance Manual
Rules for companies about intangible assets Corporate Intangibles Research and Development Manual