7(1)This paragraph applies where, in the case of any income derived by any person from the carrying on by him of a trade, profession or vocation—
(a)paragraph 6(4) of Schedule 20 to the [1994 c. 9.] Finance Act 1994 applies; and
(b)any amount which is included in the transitional overlap profit would not have been so included if—
(i)any relevant change made by that person had not been made; or
(ii)any relevant transaction entered into by that person had not been entered into.
(2)Subject to sub-paragraph (3) below, the said paragraph 6(4) shall have effect as if the reference to the transitional overlap profit were a reference to the amount (if any) by which that profit exceeds 1.25 times the aggregate of the amounts falling within sub-paragraph (1)(b) above.
(3)Sub-paragraph (3) of paragraph 1 above shall apply for the purposes of this paragraph as it applies for the purposes of that paragraph but subject to the following modifications, namely—
(a)the reference to the aggregate of the amounts mentioned in the said paragraph 2(2) shall have effect as a reference to the transitional overlap profit; and
(b)the reference to the appropriate percentage of the turnover for the transitional period shall have effect as a reference to the appropriate percentage of the turnover for the transitional overlap period.
(4)In this paragraph—
“the appropriate percentage” means the following expressed as a percentage, that is, 365 divided by the number of days in the transitional overlap period;
“the transitional overlap period” means the period beginning immediately after the end of—
the basis period for the year 1996-97; or
in the case of any income derived by any person from the carrying on by him of a trade or profession in partnership with other persons, the basis period of the partnership for that year,
and (in either case) ending with 5th April 1997;
“the transitional overlap profit” means the amount mentioned in the said paragraph 6(4).
8(1)This paragraph applies where, in the case of any income derived by any person from the carrying on by him of a trade or profession in partnership with other persons—
(a)that person (“the retiring partner”) ceases to carry on the trade or profession at any time in the transitional overlap period; and
(b)if he had not so ceased, paragraph 7(2) above would have applied in relation to him.
(2)The retiring partner shall for the year 1996-97 be chargeable to income tax under Case IV or V of Schedule D on 1.25 times the aggregate of the amounts which would have fallen within paragraph 7(1)(b) above.
(3)In this paragraph “the transitional overlap period” has the same meaning as in paragraph 7 above.