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For the purposes of corporation tax¹, the profits of a trade (or for income tax only, a profession or vocation) are computed on the basis of generally accepted accounting practice, subject to any necessary adjustments required by tax law².

For unincorporated businesses, from the tax year 2024/25, the cash basis is the default method of calculating profits or losses as long as the trade is not an excluded trade (see B2.111)³. There is an option to elect to use GAAP instead⁴. Up to and including 2023/24 the default method of calculating profits or losses was GAAP for unincorporated trading businesses but there was an option to elect into the cash basis if the business met the qualifying thresholds (see B2.112).

The treatment for valuing work in progress of a professional firm (ie the stock of a professional firm), was previously covered by SSAP 9 prior to its withdrawal. SSAP 9 provided that it should be valued at the lower of cost (ie the direct