Finance Act 2006 introduced an important relief where an uplift in taxable profits arose as a consequence of adopting the guidance in UITF40 concerning revenue recognition and work in progress, but the relief is subject to a time limit which has expired.

TCA97 s95A provides for the spreading of a tax charge over a 5 year period where the charge arises from the UITF Abstract 40 clarification of accounting treatment in relation to the value of certain work-in-progress. In certain cases, the resulting earlier recognition of profits will result in a higher tax charge in the year of change than would arise in the normal course.

The spreading applies where the change in the basis of valuation of work-in-progress arises by virtue only of the guidance in UITF Abstract 40 and the change was made in the 2 years beginning on 22 June 2005.