Income Tax Act 2007 section 546

Section 543(1)(f): tax year in which certain expenditure treated as incurred

Section 546 determines the tax year in which expenditure linked to commitments made by a charitable trust is treated as incurred, for the purposes of the non-charitable expenditure rules in section 543(1)(f).

• Applies to expenditure referable to commitments (contractual or otherwise) entered into before or during a tax year
• Expenditure is treated as incurred in the tax year if it would have been recognised in accounts prepared for that year under UK GAAP
• The hypothetical accounts must be drawn up for the relevant tax year and comply with UK generally accepted accounting practice
• This ensures that committed expenditure is allocated to the correct tax year on an accruals basis rather than a cash basis