CFM80150 - Old rules: loan relationships: authorised accounting methods: accruals basis

Features of an authorised accruals method

This guidance applies to periods of account beginning before 1 January 2005

FA96/S85(3) sets out a number of requirements that an accruals basis must satisfy to be an authorised one. These cover

• allocating payments to the accounting period to which they relate (CFM80160),
• apportioning payments that relate to two or more periods on a just and reasonable basis,
• assuming (subject to authorised arrangements for bad debt) that every amount payable will be paid in full,
• making appropriate adjustments under the authorised arrangements for bad debt,
• ensuring that any amounts released are brought into account by the debtor.

Payments can include finance costs and interest.