Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Business Income Manual

HM Revenue & Customs
, see all updates

Barristers: barristers and advocates in early years of practice

S160 Income Tax (Trading and Other Income) Act 2005

Barristers and advocates are specifically permitted to use an alternative to generally accepted accounting practice (GAAP) in their early years of practice if they were using that alternative in the tax year 2012/13.

This page explains the alternative basis. For the tax treatment of receipts prior to the commencement of the practice, see BIM51110.

Alternative basis

Barristers and advocates are regarded as commencing in practice when they first hold themselves out as available for fee earning work (see BIM51110).

Barristers or advocates in practice for a period not more than seven years after commencement of practice may compute their profits on:

  • a cash basis (i.e. receipts are recognised as income of the period in which they are received and expenses as outgoings of the period in which they are paid. All debtors, creditors, stock and work in progress are excluded), or
  • by reference to fees earned whose amount has been agreed or in respect of which a fee note has been delivered.

Once a particular basis has been adopted it must be applied consistently. The alternative basis described above ceases to apply if for any period the barrister or advocate prepares their trading profits under GAAP. In that event all future periods of account must be prepared on a GAAP basis (see BIM30510).

A barrister or advocate, who ceases to practise for a period and then recommences, cannot adopt the alternative basis for the subsequent period if, as a question of fact, this is more than seven years after he or she first commenced to practise or the trading profits have previously been prepared under GAAP.

Barristers currently using the alternative basis for the tax year 2012/13 will be able to continue to do so until the period of account ending not more than seven years after commencement of practice.

For the tax year 2013/14, newly qualified barristers will not be able to use the alternative basis of calculating their profits, but may be eligible to use the new cash basis (see BIM70000 onwards)

See BIM70060 onwards for information on leaving the alternative basis and the treatment of adjustment income on a change of basis.