Income Tax (Trading and Other Income) Act 2005 section 233

Treatment of adjustment expense

Section 233 explains how an adjustment expense arising from a change of accounting basis is treated for tax purposes, specifically its timing as a trading expense.

• An adjustment expense is treated as a trading expense of the business.
• The expense is deemed to arise on the last day of the first accounting period in which the new basis is adopted.
• There is an exception where assets have not yet been realised or written off (section 235).
• A further exception applies when a business changes from a realisation basis to a mark-to-market basis (section 236).