Published on 01 Jan 04
by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
Over the course of the twentieth century, from the Earl of Derby's case in 1915 to law firm Herbert Smith's in 1999, the UK saw a gradual but steady shift in the acceptability of accounting treatment in the determination of taxable profits, with the attitude of the courts moving from an active and palpable distrust of commercial accounting practice almost to full acceptance.
Even the Inland Revenue seems ready to accept that accounting practice can give a 'true and fair view' of taxable profit; in August 2002 they issued a consultative
document suggesting the full adoption of accounting principles, even to the extent of depreciation.
This article charts this process, by examination of the leading cases and legislative provisions, but also looks for a reason behind the change. The changing method of
calculating taxable profit has been paralleled, and arguably driven, by a changing public attitude to the very purpose of taxation.
Richard is a Senior Lecturer in Tax Law at Bournemouth University.
Current at 27 October 2003