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Joining the cash basis

On joining the cash basis, transitional adjustments may be required to ensure that income is not taxed twice and that expenditure is only relieved once. For example, if an expense was included in advance of its payment in the final profits calculated under the accruals basis (ie under generally accepted accounting practice (GAAP), see the Adjustment of profits ― overview guidance note), it cannot also be deducted as an expense if it is actually paid in the first period in which profits are calculated under the cash basis.

If the business has previously calculated profits on the accruals basis, receipts in the first year calculated under the cash may include amounts received from customers