Corporation Tax Act 2009

Adjustment on change of basis

1267 Various rules for trades and property businesses

(1) In the case of a trade or property business carried on by a firm, the amount of any adjustment under—

(a) Chapter 14 of Part 3 (adjustment on change of basis: trades), or

(b) section 262 (giving effect to positive and negative adjustments: property businesses),

is calculated as if the firm were a UK resident company.

(2) Each partner’s share of any amount brought into account as a receipt under Chapter 14 of Part 3, or section 262, is determined according to the firm’s profit-sharing arrangements for the 12 months ending immediately before the date on which the new basis was adopted.

(3) A change in the persons carrying on a trade from one period of account to the next does not prevent Chapter 14 of Part 3 applying in relation to the trade so long as a company carrying on the trade in partnership immediately before the change continues to carry it on in partnership after the change.

(4) A change in the persons carrying on a property business from one period of account to the next does not prevent section 262 applying (by virtue of section 261) in relation to the property business so long as a company carrying on the property business in partnership immediately before the change continues to carry it on in partnership after the change.

(5) Sections 1259 to 1264 do not apply so far as subsection (1) or (2) applies.

1268 Election for spreading under Chapter 14 of Part 3

(1) A change in the persons carrying on a trade does not constitute the permanent cessation of the trade for the purposes of section 186 (mark to market: election for spreading) so long as a company carrying on the trade in partnership immediately before the change continues to carry it on in partnership after the change.

(2) Any election under section 186 must be made jointly by all the persons who have been members of the firm in the period of 12 months ending immediately before the date on which the new basis was adopted.

1269 Interpretation of sections 1267 and 1268

In sections 1267 and 1268—

(a) “profit-sharing arrangements” means the rights of the partners to share in the profits of the trade or property business (as the case requires), and

(b) references to the date on which the new basis was adopted are to the first day of the first period of account for which it was adopted.