HC Deb 29 October 1999 vol 336 c1034W
Mr. Gibb

To ask the Chancellor of the Exchequer with regard to the taxation of companies, what his policy is on the accounting treatment of provisions in company accounts and its effect on capital allowances; and if he will make a statement. [95920]

Dawn Primarolo

A provision made in the accounts of a company carrying on a trade will be allowable for tax purposes ifthe provision is in respect of allowable revenue expenditure the making of the provision accords with UK generally accepted accounting practice the timing of the expenditure in question is not affected by any specific tax rule the provision is sufficiently accurate.

Capital allowances, by contrast, give relief for capital expenditure. The tax treatment of provisions, which, as the hon. Member will know, is affected by recent judicial decisions, therefore has no effect on the availability of capital allowances. The Inland Revenue continues to monitor developments in the law in this area.