Income Tax (Trading and Other Income) Act 2005 section 27

Receipts and expenses

Section 27 clarifies what is meant by "receipts" and "expenses" when calculating the profits of a trade for income tax purposes.

• In the context of calculating trade profits, "receipts" and "expenses" refer to any items brought into account as credits or debits in the profit calculation
• The terms do not imply that money has actually been received or physically paid out
• This is an accounting-based definition rather than a cash-based one
• This general rule is subject to any express provision elsewhere in the tax legislation that states otherwise