BIM34040 - Change of basis of computing taxable profits: from one valid basis to another valid basis

A valid basis is one that is in accordance with the law or practice applicable for that accounting period, BIM34020. A change in basis will occur:

• either when our view of tax law alters so that adjustments made to UK GAAP accounts in accordance with FA98/S42 change,
• or there is a change in accounting policy.

A valid basis could also consist of accounts which conflicted with tax requirements but which had tax computation adjustments to produce the same result as accounts that conformed to tax requirements. Where a business which has adopted this route at arriving at a valid basis changes the accounting policy to a valid basis this should be treated as a change from one valid basis to another.

Changes in accounting policy are dealt with at BIM34045 onwards, and changes in tax adjustments are dealt with at BIM34090 onwards.