ECL26800 - ECL example: where there is no relevant accounting period
In the unlikely event there is no accounting period ending:
- within the financial year,
- within three months of the end of the financial year, or
- before the financial year starts
then the UK revenue amounts are to be determined for the person by reference to the amount of the entity’s UK revenue that, on a just and reasonable apportionment, is attributable the financial year (please see [ECL22300]).
A just and reasonable approach may be one that takes into account when the company recognises sales. For example, the person might review whether revenue has been relatively consistent month to month across the accounting period or has it arisen at the end of the accounting period.
Please see an example of this below.
Sigma Limited commences trading on 1 January 2027 and draws up 12-month accounts to 31 December 2027 which show a UK revenue of £48 million. It is a regulated business throughout this accounting period, which means it was regulated for at least some of the 2026/27 financial year.
However, there is no accounting period ending within the 2026/27 financial year or within 3 months of the end of it. This means that FA2022 S56(6) applies, so the UK revenue for the FY is computed via a just and reasonable apportionment of the revenue in the accounting period to 31 December 2027.
Please note adjustments to band ranges do not have to be computed for Sigma Ltd, because S56(6) is only a mechanism for determining the revenue in a deemed relevant accounting period.
Step 1 - Assuming estimating revenue accrued on a straight-line basis is a just and reasonable apportionment, the revenue recognised by Sigma Ltd between 1 January 2027 and 31 March 2027 is 90/365 of the £48 million for the accounting period to 31 December 2027. This is £11.8 million.
£11.8 million of UK revenue means that it falls in Band A (more than £10.2 million but less than £36 million).
Step 2 –
Sigma Ltd was not carrying on a regulated business for the entire financial year, so the amount of ECL chargeable is proportionally reduced. In this case Sigma Ltd was regulated for 90 days, from 1 January 2027 to 31 March 2027 and therefore the levy is adjusted using 90/365 multiplied by the band charge.
The £10,200 Band A levy is adjusted to £2,515.07 which becomes due and payable on or before 30 September 2027.