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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Computation of liability: basis periods - accounts made up to slightly varying dates

S211-S213 Income (Trading and Other Income) Act 2005 (ITTOIA 2005)

Where a business adopts an annual accounting day (for example the same Saturday each year or, in the case of a school, to the last day of term) accounts will be made up to slightly varying dates each year.

To prevent this being treated as a change of accounting date each year the trader may elect, if certain conditions are met, for a ‘middle date’ to be the accounting date for the tax year.

The conditions are that:

  • The day to which the accounts are drawn up is only capable of falling on one of 7 consecutive dates (8 if that day is in February);
  • The ‘middle date’ is the fourth of those dates;
  • The election must specify the day to which the accounts are drawn up and the middle date;
  • The election must be made on or before the first anniversary of the normal self assessment filing date for the tax year to which it relates.

Other variations in accounting dates

If accounts are prepared to varying dates and the conditions set out above are not met, there will be a change of accounting date each year. But the change of accounting date rules only need to be considered each time if the taxpayer makes a notification of a change of accounting date in their SA return for the tax year concerned, see BIM81045. Otherwise the basis period will remain the period of 12 months ending with the old accounting date (S216 ITTOIA 2005).

Guidance on determining basis periods where there is a change of accounting date is at BIM81035 onwards.