The Law Society president has written to the Accounting Standards Board urging clarification of new tax rules in a bid to wipe-out widespread confusion on FRS5.
FRS5 Application Note G, which relates to the way profits and work in progress are calculated in accounts, was first introduced eight months ago.
However there is widespread confusion amongst accountants about how the change should be implemented and what it means in practice. The Law Society wants the issue referred to the Accounting Standards Board’s urgent issues task force to be clarified.
Edward Nally said that the prospect of law firms paying tax on work in progress could severely affect solicitors.
To date, few firms have made any changes to turnover and profit to account for FRS5, preferring to wait for decisive guidance.