Part 2U.K.Trading income

Chapter 3U.K.Trade profits: basic rules

24Professions and vocationsU.K.

Apart from section 30 (animals kept for trade purposes), the provisions of this Chapter apply to professions and vocations as they apply to trades.

25Generally accepted accounting practiceU.K.

(1)The profits of a trade must be calculated in accordance with generally accepted accounting practice, subject to any adjustment required or authorised by law in calculating profits for income tax purposes.

(2)This does not—

26Losses calculated on same basis as profitsU.K.

(1)The same rules apply for income tax purposes in calculating losses of a trade as apply in calculating profits.

(2)This is subject to any express provision to the contrary.

27Receipts and expensesU.K.

(1)In the Income Tax Acts, in the context of the calculation of the profits of a trade, references to receipts and expenses are to any items brought into account as credits or debits in calculating the profits.

(2)There is no implication that an amount has been actually received or paid.

(3)This section is subject to any express provision to the contrary.

28Items treated under CAA 2001 as receipts and expensesU.K.

The rules for calculating the profits of a trade need to be read with—

(a)the provisions of CAA 2001 which treat charges as receipts of a trade, and

(b)the provisions of CAA 2001 which treat allowances as expenses of a trade.

29InterestU.K.

For the purpose of calculating the profits of a trade, interest is an item of a revenue nature, whatever the nature of the loan.

30Animals kept for trade purposesU.K.

(1)Animals or other living creatures kept for the purposes of a trade are treated as trading stock if they are not kept wholly or mainly—

(a)for the work they do in connection with the carrying on of the trade,

(b)for public exhibition, or

(c)for racing or other competitive purposes.

(2)But they are not treated as trading stock if they are part of a herd in relation to which a herd basis election has effect (see Chapter 8).

(3)This section applies to shares in animals or other living creatures as it applies to the creatures themselves.

(4)This section does not apply to professions or vocations.

31Relationship between rules prohibiting and allowing deductionsU.K.

(1)Any relevant permissive rule in this Part—

(a)has priority over any relevant prohibitive rule in this Part, but