Period of 
Accounts. 
Computation 
of Income 
Tax Profit. 
322 
SECRETARIAL PRACTICE 
the inspector, on receipt of the accounts, will send in a number 
of ‘queries’ and fuither requirements, and when these have 
been satisfactorily replied to he may forward a computation 
of liability and ask whether the company is in agreement. On 
agreement the secretary will be in a position to complete the 
formal return when Form I. or Form IA. is received. It is not 
much use completing this form until the figures are actually 
agreed, except in the case where the computation is being 
contested on appeal, when the liability as desired by the 
company should be shown on this form. The Revenue looks to 
the completion of this statutory return as the formal act of 
responsibility by the company, notwithstanding all the anterior 
or auxiliary correspondence that may have taken place. 
For computing liability in established businesses for any 
financial year beginning on the 6th April, the last completed 
accounts prior to that date (e.g. 31st March or 31st December) 
are taken. Until the year 1927-28, it was necessary to take 
sufficient earlier accounts to make up in all three years (except 
for mines where a five years’ basis, and railways, and other 
specified concerns where one year, was adopted). The 
liability was the average for one year of the adjusted profits 
of the whole period. By the Finance Act, 1926, mines were 
transferred to Schedule D and the liability under Schedule D 
was to be assessed on the profits or gains, or income of the 
year preceding the year of assessment instead of on the 
average for one year of the adjusted profits of the three 
years’ period. These provisions first became operative for the 
year 1927-28. 
If the business was commenced in the year preceding the 
year of assessment, the profits of one year from the com- 
mencement thereof are taken, and if it is commenced within 
the year of assessment a computation is made either on the 
full amount of the profits arising in that year or according to 
an average of such a period not being greater than one year as 
the case may require and the Commissioners direct. 
In computing liability it is convenient to commence with 
the net profit carried into the balance sheet, and to go through 
the expenditure and add back all sums not allowable, and 
then make deductions for items allowable but not already 
charged in the accounts in getting at the net profit adopted 
as the starting point. 
ADDITIONS TO TRADING PROFIT 
(1) All book-keeping ‘rents’ for premises occupied for 
the business and owned by the company, all ground rent, 
lease rents and other charges issuing out of such property.