On 13 November, 2003, the Accounting Standards Board (ASB) issued application note G (ANG 5) to Financial Reporting Standard 5 (FRS5). While application note G was ostensibly intended to decelerate revenue recognition in certain business sectors, some interpreted ANG 5 as having the potential effect of advancing the recognition of taxable income for professional services, sometimes materially. ANG 5 affects accounting periods ending after 22 December, 2003, including many accounts ending up to 5 April, 2004, which will form the basis of tax returns to be filed no later than 31 January, 2005. With that deadline now looming, there is a pressing need for a clear interpretation of ANG 5.

On 24 March, 2004, the Institute of Chartered Accountants (ICAEW) published on its website draft guidance for members. The guidance included the suggested treatment of four contractual arrangements and example arrangements for the providers of professional services. The guidance broadly accepted that revenue should be recognised when a service provider obtains a right to consideration and that revenue for partial performance is recognised to the extent that a right to consideration has been obtained.