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HMRC internal manual

Business Income Manual

Computing the amount to assess: business changes: cessation: professions and vocations

It is sometimes suggested that a business, especially a profession, is defined by its title. The argument is that so as long as a profession is carried on by the same person (especially one possessing professional qualifications) it is the same profession, irrespective of whether or not the circumstances and/or location in which it is carried on are the same. So, for example, a qualified dentist carries on the same profession throughout his or her professional life.

This argument is incorrect. It is inconsistent with Seldon v Croom-Johnson [1932] 16TC740 at page 746, which recognises that some, though not all, businesses are ‘local’ and also rejects the identification of a business by a verbal label. It is also inconsistent with Viscount Simon’s words in Rex v General Commissioners of Income Tax for the City of London (ex parte Gibbs and Others) [1942] 24TC221 at page 239 which recognise that it is possible to succeed to some professions (see BIM54065 - Dentists: successions).

Succession (BIM80620) would be impossible if the person who left a business continued to carry on the same profession (aside from partnerships, two people cannot carry on the same profession for tax purposes).