The Gazette 1961 - 64

£

3. Costs earned (say 1962 accounting year) Costs furnished during the year ... Add: (a) estimated costs earned in 1962 on cases completed but un furnished... ... ... ... Add: (&) estimated costs earned on cases current at the end of the year ...

SOCIAL EVENTS On Saturday afternoon a number of the members took part in a Golf Competition organised by the Solicitors' Golf Society. On Saturday evening members and their wives were guests of the Donegal Solicitors' Association for a cocktail party after which there was a Dinner Dance. Over 200 members attended the Dinner Dance. Among the guests present were His Honour Judge Ryan, the President of Law Society of England and Mrs. Lawson, the Vice-President of the Law Society of England and Mrs. Long, the President of the Law Society of Scotland and Mrs. Watson, and the President of the Incorporated Law Society of Northern Ireland and Mrs. Rankin. On Sunday members attended the showing of the film "The Lawyers". INCOME TAX. ASSESSMENT ON "COSTS EARNED" BASIS A committee of the Council in the course of dealing with a query from a member relating to assessment of his profits under schedule E con sidered the general question of the assessments of a solicitor's profits on a "costs earned" or "costs furnished" basis as opposed to a "costs received" basis. On an assessment under the last mentioned basis, as is suggested by the term, a solicitor is assessed for the year on the actual profit costs received by him during the year regardless of when earned. On a " costs furnished " basis for assess ment the solicitor is assessed on the total profit figure for the bills of costs furnished by him during the year of assessment. On a " costs earned " basis of assessment the figure for costs furnished for the year is taken and on to this is added the figure for costs earned but in respect of which no bill has been furnished up to the end of the year and there is deducted from the total so obtained the figure for costs earned but in respect of which no bill was furnished at the beginning of the year. The three bases of assessment might be illustrated as follows:—

6,000

1,000

2,000 £9,000

Deduct : (a) and (b) provided at the end of the 1961 accounting year ...

4,000

Returned for assessment 1962 £5,000 and this is the way the Costs Account would appear in the books of the imaginary person concerned :— Costs Account 1961 To Balance ... ... £4,000 1962 By Costs received ... £5>5°° To Transfer to the credit of Clients ... ... 5,500 By Costs furnished and charged to Clients ... By Balance To Revenue Account: Costs earned ... 6,000 3,000 5,000 £3,000 and if we assume the office expenses, such as Salaries, Telephone, Stationery, Rent, etc., at £3,500 we find that the Net Profit Costs would be :— Costs received basis ... £2,000 „ Furnished basis ... 2,500 ,, Earned basis ... ... 1,500 The committee had before them also the recent English decision of Wetton Page & Co. v. Attwooll (1963 i All England Reports, page 166) from which it appears that the Inspector of Taxes can elect upon 1962 To Balance £14,500 £14,500

1. Costs received (say 1962 accounting year) Costs earned and paid in the year ... Costs received on bills furnished in the previous or earlier years ... 2. Costs furnished (say 1962 accounting year) Total costs (excluding outlay) on bills furnished in the year (although relating to 1962 and the previous year or years) ... ... ... Total ...

5 ,000

500

£5,500

6,000