Old rules: derivative contracts: basic rules pre FA 2004: applying the correct method
Applying the correct method
This guidance applies to periods of account beginning before 1 January 2005
To identify the right method to be used for tax purposes
- identify the accounting basis used in the statutory accounts
- decide if this is an authorised basis (CFM84010), or equates to an authorised basis (CFM84130).
These are defined in FA02/SCH26/PARA52(1). The definition covers accounts drawn up under
- Companies Act 1985
- Companies Act (Northern Ireland) Order 1986
- Section 70 Friendly Societies Act 1992.
If no accounts have been drawn up under these regulations, then the definition extends to
- any accounts the company must produce according to the legislation of the country of incorporation (which may be a part of the UK if none of the three laws above apply - e.g. for building societies), or failing that
- the accounts that most closely match the requirements of the Companies Act 1985.