Where a company’s accounting treatment does not meet the
requirements of GAAP, see
CIRD30020, it must be replaced for the
purposes of the new rules by the treatment that does meet those
requirements.
The consequences of substituting GAAP for the treatment
actually adopted is followed through to subsequent periods even if
the accounts for those periods, viewed in isolation, are in
accordance with GAAP.
An illustration of the effect of this rule is where a sum is
written off immediately in the accounts but it is established that
the sum should have been amortised over, say, five years. The
accounts for years 2 to 5 in fact show no deductions in respect of
that sum (because as a matter of fact the asset was wholly written
off in year 1). Even if it can be said that the treatment for years
2 to 5 conforms to GAAP, a deduction can be allowed for tax in
years 2 to 5.
