SA entry of European Commission Project Grants

[Tekni]

I am a Consultant, registered as a ‘Sole Trader’, and complete Self Assessment forms each year.
I am also registered with the European Commission (EC) as a ‘Natural Person’ and I am a Partner (Beneficiary) in a Framework Programme 7 project. This means I receive a ‘Grant’ to cover my effort on the Project (at an EC mandated hourly rate) and my incurred expenses. The project lasts two years and spans the UK FY 2010-11, 2011-12 and 2012-13.
Early in the project, in FY 2010-11, the Commission provided ‘pre-financing’ sums (in Euros) to each beneficiary of a percentage of the overall estimated cost (similar to a ‘Customer Advance’). Actual expenditure and costs are claimed against this periodically as the project proceeds, with the final costs being claimed at the end. Thus:-
• I received pre-financing in FY 2010-11 in excess of my FY2010-11 expenditure. This I retained in a ‘Euro’account.
• I recorded my effort and expenditure fully
• I then claimed for ‘costs to date’ at the end of ‘Phase 1’ (Around September 2011), which was approved. This included 2010-11 costs
Question:
Do I declare recorded (and approved) effort for FY 2010-11 as my income for 2010-11? (And any interest received on pre-financing sum) OR:
Do I declare full pre-financing sum as income in 2010-11, although I will not have ‘earned’ it all until 2011-12? OR:
What? !!
How do I handle Euro sums in a Euro account ( Isle of Man) on SA forms?