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Anonymous@4.32

On the contrary, HMRC started charging tax on WIP (and then gave a three year transitional period) because of a self-inflicted blow by the accountancy profession.

Professional firms had sensibly left WIP out of their accounts but the Accountancy Standards Board said that post Enron, accounts had to book WIP at estimated value. Of course this didn't just hit solicitors, but also accountants, which is why the blow was self inflicted.

It was the logic of the madhouse; that because Enron had booked too early revenue they hadn't earned; solicitors should be prohibited from delaying booking revenue until a bill was sent out.

The Revenue thought it was Christmas and simply taxed in accordance with the new accounting standards.