Income Tax (Trading and Other Income) Act 2005

Slight variations in accounting date

211 Treating middle date as accounting date

(1) This section applies for the purpose of preventing the rules in sections 215 to 220 from applying if—

(a) accounts of a trade are drawn up to a particular day (rather than to a particular date), and

(b) that day is capable of falling on one of only 7 consecutive dates (or, if that day is in February, on one of only 8 consecutive dates).

(2) The person carrying on the trade may elect in relation to a tax year for the fourth of those dates (“the middle date”) to be treated as the accounting date in the tax year.

(3) The election has effect for the purposes of this Chapter, but not for any other purposes.

(4) An election under this section—

(a) must specify the day to which the accounts are drawn up and the middle date, and

(b) must be made on or before the first anniversary of the normal self-assessment filing date for the tax year to which it relates.

212 Consequence of treating middle date as accounting date

(1) If—

(a) a date (“the middle date”) is treated under section 211 as the accounting date in a tax year (“the current tax year”),

(b) the basis period for the current tax year would otherwise be that given by the general rule in section 198, and

(c) subsection (2) or (3) applies,

the basis period for the current tax year begins immediately after the end of the basis period for the previous tax year and ends with the middle date.

(2) This subsection applies if—

(a) the accounting date in the previous tax year was not determined under section 211, and

(b) that accounting date was one of the 7 (or 8) dates on which the day in the current tax year to which accounts are drawn up is capable of falling.

(3) This subsection applies if—

(a) the accounting date in the previous tax year was determined under section 211, and

(b) the accounting date in the current tax year is the same as the accounting date in the previous tax year.

213 Circumstances in which middle date not treated as accounting date

(1) If—

(a) a date (“the middle date”) is treated under section 211 as the accounting date in a tax year (“the earlier tax year”),

(b) the basis period for the earlier tax year ends on the middle date, and

(c) the basis period for the following tax year (“the later tax year”) is that given by one of the provisions listed in subsection (2),

the basis period for the later tax year is determined as if the basis period for the earlier tax year had ended on the date to which accounts were actually drawn up in the earlier tax year.

(2) The provisions are—

(a) section 201(1) (tax year in which there is no accounting date),

(b) section 202(1) (tax year in which person permanently ceases to carry on a trade),

(c) section 215(2) (change of accounting date in third tax year), and

(d) section 216(3) (change of accounting date in later tax year).