BIM74090 - Abolition of the cash basis: rôle of Inspectors

Only make enquiries in worthwhile cases

We do not want the change to a new system of itself to give rise to large numbers of enquiries. Reasons for this are

• First, the change to a new basis which in general will recognise profits earlier is not going to be popular; it will be even less so if it gives rise to large numbers of enquiries into relatively minor amounts.
• Second, enquiries into (especially) the basis of valuation of work in progress are likely to involve a good deal of fact-finding work. There are unlikely to be quick and easy answers.
• And finally, most of the issues that will arise on such enquiries are likely to be ones of accountancy practice rather than tax law, so that an enquiry will require the additional resource commitment of one of our accountants.

You need to consider if the likely result of an enquiry is commensurate to the resource cost. The practical aspects are developed in BIM74095.