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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Computing the amount to assess: business changes: cessation: break in activities

A period of trading activity may be followed by a period in which little or no activity takes place, which is then followed by further trading activity. In this situation the question is whether the later trade is the same trade as the former one (this will often be relevant in relation to the application of the commencement and cessation provisions and the availability of losses carried forward or back).

The new activity may be so different in scale and/or nature from the old one that it cannot be the same trade and must represent the commencement of a new trade (BIM80595) (Seaman v Tucketts Ltd [1963] 41TC422).

Where, however, the new activity is similar in scale and nature to the old, it is relevant to look at all the circumstances in which the break occurred, including the length of the break and the intentions of the business proprietors (as shown by their actions) at the time the earlier activity ceased (Kirk & Randall Ltd v Dunn [1924] 8TC663; Goff v Osborne & Co (Sheffield) Ltd [1953] 34TC441; J G Ingram & Son Ltd v Callaghan [1968] 45TC151; Robroyston Brickworks Ltd v CIR [1976] 51TC230).