Basis of accounting

24ACash basis to apply by default

1

The profits of a trade for a tax year must be calculated on the cash basis, unless—

a

the trade is an excluded trade in relation to the tax year (see section 25B), or

b

an election under section 25C(1) has effect in relation to the trade for the tax year.

2

In this Part—

a

references to calculating the profits of a trade on the cash basis are references to doing so in accordance with this section, and

b

references to a trade in relation to which the cash basis applies are to a trade the profits of which are required by virtue of subsection (1) to be calculated on the cash basis.

3

Chapter 3A contains provision about the calculation of profits on the cash basis and the application of the rest of this Part in relation to the cash basis.

4

Where the cash basis applies in relation to a trade, sections 27, 28 and 30 do not apply in relation to the calculation of the profits of the trade.

5

This section does not affect provisions of the Income Tax Acts relating to the calculation of the profits of Lloyd's underwriters.