ABSTRACT
Financial reports for unincorporated businesses are not subject to specific statutory or other regulation unless they are prepared for income tax purposes. The accounts of such businesses prepared for income tax purposes must be prepared in accordance with generally accepted accounting practice (Finance Act 1998, s 42(1)). This requirement brings the profit and loss account of sole traders and partnerships, insofar as they are used for income tax purposes, into line with the regulation of company accounts. Accounting standards applied to the compilation of company accounts will, so far as they are relevant, need to be followed in relation to partnership and sole trader tax accounts. Notwithstanding the absence of regulation, financial statements for partnerships and sole traders should be drawn up in accordance with accepted accounting practices and standards and with regard to the published standards of the Accounting Standards Board.
7.1 PURPOSE OF FINANCIAL STATEMENTS
