Section 1179BC | When costs are to be taken as incurred ^F1

(1)For the purposes of section 1179BB, costs are incurred when they are represented in the state of completion of the work in progress.

(2)Accordingly—

(a)payments in advance for work to be done are to be ignored until the work has been carried out, and

(b)deferred payments are to be recognised to the extent that the work is represented in the state of completion.

(3)But an amount that has not been paid is not an incurred cost until there is an unconditional obligation to pay it.

(4)If an obligation is linked to income being earned from the qualifying production, no amount is to be brought into account in respect of the costs of the obligation unless an appropriate amount of income is or has been brought into account.