Oil Industry accounting: use and application of UK accounting standards
Accounting standards are authoritative statements of how particular types of transaction and other events should be reflected in financial statements, and compliance with them will normally be necessary for them to give a true and fair view. A departure is likely to be justified only in exceptional circumstances and in this event the reasons for it and the financial effect must be disclosed. See OT02003 and OT02020 re the application of UK accounting standards.
The standards do not apply to overseas incorporated companies, even if they are subsidiaries of a UK incorporated parent, or to their branches trading in the UK. These companies and branches will prepare their accounts in accordance with the accounting standards applicable in the country of their incorporation.
Where financial statements prepared under foreign accounting standards run contrary to UK tax principles, appropriate adjustments will need to be made for the purposes of tax. This is because the starting point for Case I of Schedule D is the profits of a trade computed on an accounting basis which gives a true and fair view, subject to any adjustment required or authorised by law in computing profits for those purposes (CTA09\S46). From FA04 both UK GAAP and International Accounting Standards are acceptable bases for UK tax purposes.