PBR05: Firms get Abstract 40 relief
Firms to get relief over revenue recognition rules
Professional services firms will breathe a sigh of ‘relief’ after the
pre-Budget report contained details of a tax spreading relief to counter the
onerous financial implications of revenue recognition rules.
Accounting institutes had issued concern that the clarification of Abstract
40, regarding how to account for revenue recognition, would lead to many
professional services firms suffering a massive one-off tax hike.
Through umbrella body CCAB, plus efforts by the Law Society, the pre-Budget
report contains details of a three-year relief, up to six years for businesses
most severely affected.
Frank Haskew, head of the ICAEW tax faculty, was reasonably satisfied,
despite the institutes having lobbied for a 10-year relief.
‘Given the position, it could be worse,’ said Haskew.’ It’s better than no
spreading at all.’
‘This is very good news for solicitors and will be a huge relief for many
practitioners who simply didn’t know how they would be able to pay their tax
next year. We have worked very closely with the CCAB and the Treasury to resolve
this problem,’ said Law Society president Kevin Martin.