BIM72010 - Cash basis: eligibility

S24A ITTOIA 2005, S148K ITTOIA 2005

A person must calculate profits or losses on the cash basis unless the following conditions apply:

  1. »Ê¹ÚÌåÓýappy have elected to calculate profits or losses in accordance with generally accepted accounting principles for that tax year.
  2. »Ê¹ÚÌåÓýappy are excluded from using the cash basis.

Exclusions

»Ê¹ÚÌåÓýapp cash basis is available for unincorporated businesses only, companies and limited liability partnerships cannot use it.

In addition, the following are excluded from using the cash basis:

  • Partnerships with one or more corporate partners
  • Lloyd’s underwriters
  • Businesses with a current herd basis election
  • Persons with a S221 ITTOIA 2005 profit averaging election
  • Businesses that have claimed business premises renovation allowance at any time within the seven years ending immediately the tax year
  • Businesses that carry on a mineral extraction trade
  • Businesses that have claimed research and development allowance.

For businesses using the cash basis, certain rules concerning the tax treatment of specific trades, professions or vocations are disapplied. »Ê¹ÚÌåÓýappse rules are found in ITTOIA 2005:

  • Dealers in securities, S149 - 154A
  • Relief for mineral royalties, S157
  • Lease premiums, S158
  • Ministers of religion, S159
  • Mineral exploration and access, S161
  • Payments by persons liable to pool betting duty, S162
  • Intermediaries treated as making employment payments, S163 - 164
  • Managed service companies, S164A
  • Waste disposal, S165 â€� 168
  • Cemeteries and crematoria, S169 - 172ZE