Corporation Tax Act 2009 section 46

Generally accepted accounting practice

Section 46 establishes the fundamental rule that trading profits for corporation tax must be calculated in accordance with generally accepted accounting practice (GAAP), while clarifying the limits of that requirement and noting exceptions for certain specialist businesses.

• Trading profits must be calculated in accordance with generally accepted accounting practice (GAAP), subject to any adjustments required or permitted by tax law
• The requirement to follow GAAP applies only to the basis of calculating profits — it does not impose Companies Act compliance obligations, audit requirements, or disclosure obligations
• GAAP generally requires an accruals basis of accounting, taking into account debtors, creditors, and the value of stock
• Special rules override the general GAAP requirement for certain businesses, including Lloyd's underwriters, and any other business types for which the Corporation Tax Acts lay down specific profit calculation rules