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A sum can be included in the computation of profit of a past period if the title to it arose in that period, even if the precise amount of it was not ascertained and received until a later period. There are several cases that illustrate the weight that courts have placed on the need to match receipts with expenditure and recognising income at the correct time. HMRC states¹ that a challenge is more likely to occur in circumstances where the recognition of incomings in the commercial accounts is made on a particularly conservative basis which can be overridden for tax purposes following principles developed by the courts.

In Isaac Holden² a firm of woolcombers was engaged in combing wool on a commission basis during the 1914–18 war when the industry was controlled by the government. A scale of rates of commission was fixed in 1917 and in 1918 a provisional increase of 10% was made as from 1 January 1918, subject to adjustment after the accounts to 31 December 1918 had been examined. In 1919 a total increase