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HMRC internal manual

Business Income Manual

Cash basis: alternative basis: barristers ceasing to use the alternative basis

Para 57, Schedule 4 FA 2013

Barristers leaving the alternative basis

When barristers and advocates leave the alternative basis and move to the accruals basis they are within the scope of Chapter 17 ITTOIA which deals with changes of basis. Chapter 17 ensures that on a change of basis income is taxed once and once only and expenditure relieved once and once only. It does this by computing adjustment income (which is taxable) and adjustment expense which is deductible.

Barristers and advocates may have adjustment income on ceasing to use the alternative basis as they will have to include debtors and work in progress when computing profits on the accruals basis. S238 ITTOIA 2005 allows them to spread adjustment income over the 10 years following the cessation of the alternative basis.

By contrast, barristers and advocates leaving the alternative basis and moving to the new cash basis will not have adjustment income arising.