Corporation Tax Act 2009 section 718

GAAP-compliant accounts: reference to consolidated group accounts

Section 718 allows reference to consolidated group accounts when determining whether a company's individual accounts are GAAP-compliant, particularly regarding views taken on asset useful life and economic value.

• When assessing GAAP compliance, a company may rely on views about an asset's useful life or economic value taken in consolidated group accounts for any group of which the company is a member.
• This reference is not permitted where the consolidated group accounts use a different accounting framework from the company's individual accounts and, as a result, substantially diverge on matters of asset life or value.
• The reference is also not permitted where the consolidated group accounts are prepared under the law of a country outside the United Kingdom and substantially diverge from generally accepted accounting practice on those same matters.
• The section ensures consistency between individual and group-level accounting treatments while preventing reliance on group accounts that are prepared on a fundamentally different basis.