The Small Companies and Groups (Accounts and Directors' Report) Regulations 2008 SCHEDULE 7 — INTERPRETATION OF TERM “PROVISIONS”

Definition of “Provisions”

1

(1) In these Regulations, references to provisions for depreciation or diminution in value of assets are to any amount written off by way of providing for depreciation or diminution in value of assets. (2) Any reference in the profit and loss account formats set out in Part 1 of Schedule 1 to these Regulations to the depreciation of, or amounts written off, assets of any description is to any provision for depreciation or diminution in value of assets of that description.

Definition of “Provisions”

2

References in these Regulations to provisions for liabilities are to any amount retained as reasonably necessary for the purpose of providing for any liability the nature of which is clearly defined and which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

2A

At the balance sheet date, a provision must represent the best estimate of the expenses likely to be incurred or, in the case of a liability, of the amount required to meet that liability.

2B

Provisions must not be used to adjust the values of assets.

Financial assistance for purchase of own shares

3

The specified provisions for the purposes of section 677(3)(a) of the 2006 Act (Companies Act accounts: relevant provisions for purposes of financial assistance) are provisions for liabilities within paragraph 2 of this Schedule.

Redemption or purchase by private company out of capital

4

The specified provisions for the purposes of section 712(2)(b)(i) of the 2006 Act (Companies Act accounts: relevant provisions to determine available profits for redemption or purchase out of capital) are provisions of any of the kinds mentioned in paragraphs 1 and 2 of this Schedule.

Justification of distribution by references to accounts

5

The specified provisions for the purposes of section 836(1)(b)(i) of the 2006 Act (Companies Act accounts: relevant provisions for distribution purposes) are provisions of any of the kinds mentioned in paragraphs 1 and 2 of this Schedule.

Realised losses

6

The specified provisions for the purposes of section 841(2)(a) of the 2006 Act (Companies Act accounts: treatment of provisions as realised losses) are provisions of any of the kinds mentioned in paragraphs 1 and 2 of this Schedule.