BIM46510 - Specific deductions: provisions: allowability for tax

A provision made in accounts is the recognition of a liability, the timing or amount of which is uncertain. Provisions are distinguished from trade payables and accruals and are reported separately in accounts.

The word 바카라 사이트˜provision바카라 사이트™ is also often used to refer to the recognition of a reduction in the carrying amount of an asset, for example, a debt impairment provision or an inventory (stock) provision. The rules governing such 바카라 사이트˜provisions바카라 사이트™, both in accountancy practice and tax law, are different, and covered elsewhere in this guidance (stock/inventory valuation BIM33100 onwards, debt impairment BIM42700 onwards).

Otherwise a provision made in accounts will only be allowable for tax purposes if:

  • It is in respect of allowable revenue expenditure and not for example, in respect of capital expenditure see RTZ Oil & Gas Ltd v Elliss [1987] 61 TC 132.
  • It is in accordance with Generally Accepted Accounting Practice (GAAP).
  • It does not conflict with any statutory rule governing the time at which expenditure is allowed.
  • It is estimated with sufficient accuracy, see BIM46555.