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HMRC internal manual

Business Income Manual

Computing the amount to assess: business changes: changes in scale, nature or location of trade: general principles

Trades are rarely static and can change their nature over the years so as to be unrecognisable from their origins. A change in the scale and/or nature of a trade, if substantial enough and taking place over a short period of time, can cause the permanent discontinuance of one trade and the commencement of a new and different one.

This may be an issue in the context of, for example

  • the cessation and commencement provisions (BIM81000 onwards), or
  • the rules for claiming losses carried forward (BIM85060).

The question is also relevant in the context of S673 Corporation Tax Act 2010, which disallows trading losses carried forward by a company following a change in ownership and ‘a major change in the nature or conduct of a trade.’ (CTM06370).