Finance Leasing Manual - FLM21.05

Old Schedule A: basis for recognising income

For periods to which 'old' Schedule A applies (1994/95 and earlier for income tax; periods before 1 April 1998 for corporation tax) Section 15(1) 2 ICTA 1988 provides that:

'Tax under this Schedule shall be charged by reference to the rents or receipts to which a person becomes entitled in the chargeable period.'

This basis, therefore, is quite unlike the charge on trades which relies on normal accountancy practice.

For periods to which 'old' Schedule A applies there is also an acceptable Schedule A income-recognition practice which dates back to a Ministerial statement in the House of Commons as the rules were going through the house in 1963: HC Debates (26 June 1963) Vol 679 col 1450. This says that the Revenue will accept profits computed using normal accountancy accruals principles.