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Where grants and subsidies form part of the trading income of farms, the question arises as to the date when they should form part of the taxable profit. The starting point is to identify what is the precise purpose of a grant or subsidy, eg whether it is intended to be set off against particular costs or to be treated as a subsidy for a particular period. The purpose of the grant may be, however, to subsidise trading income in general or, as can be in the case of the basic (formerly single) payment scheme, be a payment for land management. The general tax principle is that trading receipts are taxed when they are recognised in the accounts (so long as the accounts are drawn up in accordance with generally accepted accounting practice)¹. Thus neither the date of receipt, nor when the receipt is 'earned' can necessarily determine when the receipt is taxable. Under FRS 102 government grants cannot be recognised until there is reasonable assurance that the farmer will comply with the grant conditions and