Although accounting principles and practice normally form the basis for tax
assessment, there are reasons why there should be variations between the figures used
for commercial accounting and tax assessment. These include the different purposes
of commercial accounting and taxation, difficulties in defining economic concepts
and the administrative effectiveness required of a tax system. This paper also
examines recent developments in the UK and discusses the wider perspective of
practice in Europe. It concludes that the relationship between accounting and taxation
is an evolving one and further developments are to be expected.