A
Abridged accounts
A small company's accounts drawn up with fewer balance sheet and profit and loss lines, with every member's consent. Not available for filings from 1 April 2028. See abridged and filleted accounts.
Accounting reference date
The date a company's financial year ends each year. A new company's first one is the last day of the month of its first anniversary. See changing a company's year end.
Adjusted net income
Total taxable income before personal allowances, less reliefs such as pension contributions and Gift Aid; used for the High Income Child Benefit Charge.
Administrative restoration
Restoring a company struck off by the registrar by applying to Companies House on form RT01. See restoring a company.
Agent services account
HMRC's account for agents, used to sign clients up for Making Tax Digital and to connect software to HMRC. See connecting the practice to HMRC.
Annual earnings period
The yearly period over which a company director's Class 1 National Insurance is worked out. See directors' National Insurance.
Annual investment allowance
A capital allowance of up to £1 million a year on plant and machinery other than cars. See capital allowances rates for 2026.
Associated company
A company that controls, or is controlled by, another company, or is under the same control, at any time in the accounting period. The corporation tax limits are divided by the number of them plus one. See associated companies.
Audit exemption
The exemption from audit for small, qualifying subsidiary and dormant companies, claimed with statements on the balance sheet. See audit exemption.
Automation bias
The tendency to favour output from an automated system even when other information casts doubt on it. See checking AI output.
B
Balancing payment
The tax still owed for a year after payments on account, due 31 January after the tax year. See payments on account.
Bank reconciliation
Agreeing the bank account in the books to the bank statement at a date and listing the timing differences. See bank reconciliation explained.
Bona vacantia
Property of a dissolved company, which passes to the Crown. See striking off a company.
Bridging software
Software that sends figures from a spreadsheet to HMRC under Making Tax Digital. See bridging a VAT return.
C
Cash basis
Working out a sole trader's or partnership's profits from money received and paid, the default from 2024 to 2025. See cash basis and accruals basis.
Claim notification
A form telling HMRC in advance that a company plans to claim R&D relief, due within 6 months of the end of the period of account. See research and development relief.
Class 1A National Insurance
Employer National Insurance on taxable benefits in kind, 15% of the cash equivalent for 2026-27, reported on the P11D(b). See P11D and Class 1A.
Close company
A company controlled by 5 or fewer participators, or by participators who are directors. Loans it makes to participators can bring the section 455 charge. See close companies and section 455.
Confirmation statement
The CS01, filed with Companies House at least once every 12 months to confirm the company's details. See filing a confirmation statement.
CT600
The Company Tax Return, filed with HMRC with the accounts and computation in iXBRL. See preparing a CT600.
Cumulative quarterly update
A quarterly update covering the tax year from its start to the end of the period, so the next update carries any correction. See quarterly updates.
Customer due diligence
Identifying and verifying a client and its beneficial owners and understanding the purpose of the relationship, as the Money Laundering Regulations require. See client due diligence.
D
Data protection fee
The annual fee paid to the ICO by organisations that use personal information, unless exempt. See data protection for practices.
Data protection impact assessment (DPIA)
A written assessment of the risks of processing personal data and how they are reduced, expected by the ICO for most AI use. See AI and data protection.
De minimis (VAT)
Limits under which a partly exempt business can recover all its input tax: exempt input tax of no more than £625 a month on average and half its total input tax. See partial exemption.
Deductions allowance
The £5 million a year of carried-forward losses a company or group can use in full before the 50% restriction applies. See corporation tax losses.
Digital handshake
HMRC's way for a client to authorise an agent from a link sent from the agent services account. The link expires after 21 days. See agent authorisation and form 64-8.
Digital link
A way of moving data between software without retyping it, which Making Tax Digital requires. See the guide for agents.
Digital verification services register
The GOV.UK register of identity services certified against the UK trust framework. See AI and anti-money laundering.
Digitally excluded
Someone HMRC accepts cannot reasonably use software because of age, health, disability, religious belief or location. See exemptions.
Directors' loan account
The account recording money a director takes from or pays into the company, other than salary, dividends and expense repayments. See directors' loan accounts.
Distributable profits
A company's accumulated realised profits less its accumulated realised losses, the limit on what it can pay as dividends. See dividends and distributable reserves.
Domestic reverse charge
A rule under which the customer, and not the supplier, accounts for the VAT on most building and construction services reported under CIS. See the construction reverse charge.
Dormant company
For Companies House, a company with no significant transactions in the year. HMRC has its own test. See dormant company accounts.
Double entry
Recording each transaction as an equal debit and credit in two accounts, so the ledger always balances. See double-entry bookkeeping.
E
Employer Payment Summary
The Real Time Information report sent by the 19th to claim reductions such as the employment allowance and statutory pay recovery, or to report a month with no pay. See the FPS and EPS.
End user (construction VAT)
A VAT and CIS-registered business that does not make onward supplies of the construction services it receives. See the construction reverse charge.
F
Filleted accounts
A small company's accounts filed at Companies House without the profit and loss account or directors' report. See abridged and filleted accounts.
Final declaration
The end-of-year step under Making Tax Digital for Income Tax, made by the main agent by 31 January. See the end of the year.
Finance cost restriction
The rule that gives individual landlords a basic rate tax reduction for mortgage interest on residential property. See the finance cost restriction.
Flat rate scheme
A VAT scheme where the business pays a fixed percentage of its VAT-inclusive turnover. See the flat rate scheme and limited cost traders.
FRS 102 Section 1A
The small companies section of FRS 102, for companies within the small company limits. See FRS 105 and FRS 102 Section 1A compared.
FRS 105
The accounting standard for micro-entities. See FRS 105 and FRS 102 Section 1A compared.
Full expensing
A 100% first-year allowance for companies on new main rate plant bought from 1 April 2023. See capital allowances rates for 2026.
Full Payment Submission
The Real Time Information report an employer sends HMRC on or before each payday, listing every employee's pay and deductions. See the FPS and EPS.
G
Gross payment status
Construction Industry Scheme status that lets a subcontractor be paid with no deduction. See CIS for subcontractors.
H
Hallucination
Output from an AI tool that is wrong or invented but presented as fact, such as a case that does not exist. See checking AI output.
I
iXBRL
Inline XBRL, the tagged format HMRC needs for accounts and computations with the CT600. See what iXBRL tagging is.
L
Limited cost business
A flat rate business whose spending on goods is below 2% of turnover, or below £1,000 a year, which pays 16.5%. See the flat rate scheme.
Lock date
In Accountin, the date on or before which nothing can be added, changed or deleted. See lock dates and the year-end transfer.
M
Main agent
The one agent a client appoints with full access under Making Tax Digital for Income Tax, including the tax return. See agent roles.
Main agent and supporting agent
Under Making Tax Digital for Income Tax a client has one main agent, who can make the final declaration, and any number of supporting agents. See setting up a client.
Marginal relief
The relief that tapers corporation tax between 19% and 25% for profits from £50,000 to £250,000. See corporation tax rates for 2026 to 2027.
Micro-entity
A company within two of three limits: £1 million turnover, £500,000 balance sheet and 10 employees, for years from 6 April 2025. See FRS 105 and FRS 102 Section 1A compared.
N
Nominated officer
The person in a practice who receives staff reports of suspected money laundering and decides whether to report to the National Crime Agency. See anti-money laundering supervision.
O
Overlap relief
Relief for profits taxed twice under the old basis period rules, deducted from transition profit in 2023 to 2024. See basis period reform.
P
Partial exemption
The position of a business that makes both taxable and exempt supplies and can recover only the input tax relating to its taxable supplies. See partial exemption.
Payment and deduction statement
The monthly statement a CIS contractor gives each subcontractor within 14 days of the end of the tax month. See CIS for contractors.
Payments on account
Two advance payments towards a Self Assessment bill, due 31 January and 31 July, each normally half the previous year's bill. See payments on account.
PCRT
Professional Conduct in Relation to Taxation, the joint guidance of the tax and accountancy bodies, which has topical guidance on AI. See professional body guidance on AI.
Penalty point
A point given for a missed submission deadline. Under Making Tax Digital for Income Tax a £200 penalty follows at 4 points. See penalties.
Penalty point (VAT)
A point recorded for each late VAT return, leading to a £200 penalty at the threshold. See VAT penalties and interest.
Personal code
The 11-character code a person gets from Companies House when they verify their identity. See identity verification.
Politically exposed person
Someone entrusted with a prominent public function, whose relationship with a practice needs enhanced due diligence and senior management approval. See client due diligence.
Postponed VAT accounting
Declaring and reclaiming import VAT on the VAT return with no payment at the border. See postponed import VAT.
Prepayment
A cost paid in one period that relates to a later one, carried on the balance sheet as an asset. See accruals and prepayments.
Presenter ID
The Companies House account a practice uses to file for its clients. See filing details.
Professional enquiry
The letter an incoming accountant sends to the existing accountant before accepting a client, also called professional clearance. See professional clearance.
Prompt injection
Instructions hidden in text an AI tool reads, such as a document or email, that make the tool act in ways its user did not intend. See where AI helps in a practice.
Q
Qualifying earnings
The band of earnings, £6,240 to £50,270 for 2026-27, on which minimum automatic enrolment pension contributions are worked out. See automatic enrolment duties.
Qualifying income
Gross self-employment and property income before expenses, from the return HMRC checks, used to decide whether a client must use Making Tax Digital for Income Tax. See the readiness plan.
Quarterly update
The cumulative summary of income and expenses sent to HMRC under Making Tax Digital for Income Tax. See sending a quarterly update.
R
Reducing balance depreciation
Depreciation charged as a fixed percentage of an asset's carrying amount, so the charge falls each year. See depreciation methods.
Reversing journal
A journal that posts its own reversal on the first day of the next month, used for accruals and prepayments. See journals and reversing journals.
Revision by supplementary note
Correcting defective accounts with a signed note that forms part of the original accounts. See revising defective accounts.
S
Section 455 charge
Temporary corporation tax on a close company's loan to a participator still outstanding 9 months after the year end, at the dividend upper rate. See close companies and section 455.
Small employers' relief
Recovery of 109% of statutory family payments for an employer that paid £45,000 or less in Class 1 National Insurance in the previous tax year. See statutory payments.
Supplementary pages
Extra pages filed with the CT600 for particular claims or charges, from CT600A to CT600P. See CT600 supplementary pages.
Supporting agent
An agent with limited access under Making Tax Digital for Income Tax who can keep records and send quarterly updates but cannot submit the tax return. See agent roles.
Suspense account
A temporary account holding an entry whose correct account is not yet known, cleared to nil before the accounts are prepared. See suspense accounts.
T
Terminal loss relief
Relief that carries a loss from a company's final 12 months of trade back against profits of the previous 3 years. See corporation tax losses.
Trading allowance
Up to £1,000 a year of gross trading income that is tax free, or can be deducted in place of expenses. See trading and property allowances.
Transition profit
Profit from the end of a business's 2022 to 2023 basis period to 5 April 2024, less overlap relief, taxed over five years. See basis period reform.
Trial balance mapping
Deciding where each account in a trial balance goes in the year-end accounts. See mapping a trial balance.
V
Voluntary strike off
Removing a company from the register at the directors' request on form DS01. See striking off a company.
X
XI prefix
The letters a business trading goods between Northern Ireland and the EU puts before its UK VAT number. See VAT on EU and Northern Ireland goods.
Y
Year-end transfer
The journal that moves the year's profit and loss balances into retained profit or capital. See lock dates and the year-end transfer.