Income tax and the profit and loss account
It is almost impossible to ascertain the amount of the profit of a trade to be assessed under ITTOIA 2005 without a profit and loss account1. The exception to this is where the cash basis is being used for income tax purposes (see B2.111 and B2.112). Although there is no requirement in the tax legislation for a trader to prepare such an account (but see below regarding certain partnerships), there is a requirement to keep and preserve records of amounts received and paid out in the course of the trade, records of sales and purchases of goods where appropriate,
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