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Accounting and tax treatment of contingent unbilled time - a reminder

The SSIG committee felt that it would be helpful to issue a reminder of the conclusions regarding the recognition for tax and accounting purposes of contingent unbilled time, and in particular contingent fee arrangement (CFA) matters that are often prevalent in the financial accounts for law firms.

Readers will recall that this debate was live for some time, but conclusion was reached during 2009 following the concerted efforts of the SSIG, ICAEW more widely and discussions with both the ASB and HMRC.

The key conclusions to keep in mind are: