Law firms that make a 'reasonable effort' to comply with recently-introduced accounting rules have no need to fear investigations into their tax affairs, a senior official from Revenue & Customs said this week.


The introduction of UITF 40, an accounting statement issued by the Accounting Standards Board in 2005, changed the way firms and professional practices account for revenue and work in progress. The underlying principle is that a firm's revenue should reflect its activity in the year rather than the fees billed.



Many law firms had to apply the new rules for the first time for their tax payment in January this year.



Matt Blake, an advisory accountant at Revenue & Customs, told delegates at the annual conference of the solicitors group of the Institute of Chartered Accountants in England & Wales, that evidence of 'reasonable methodology and a genuine effort to comply with UITF 40' would be acceptable. 'If reasonable principles are consistently applied and reviewed regularly, firms have nothing to fear,' he added.



Jonathan Rayner