Corporation Tax Act 2009 section 1226

Accounts not conforming with GAAP

Section 1226 provides a timing rule for management expenses when a company's accounts do not comply with generally accepted accounting practice (GAAP).

• This section applies where a company incurs management expenses but does not record them in its accounts in accordance with GAAP.
• Even if the accounts are not GAAP-compliant, management expenses must still be allocated to the correct accounting period as if GAAP had been followed.
• The timing rule from section 1225 is applied hypothetically — expenses are treated as referable to whichever period they would have fallen into under GAAP-compliant accounts.
• This ensures that non-compliance with accounting standards does not allow a company to shift the timing of management expense deductions.