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HMRC internal manual

Corporate Finance Manual

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.