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HMRC internal manual

Business Income Manual

Businesses: mergers: one business continues and the other(s) ceases

The owner(s) of business A may merely acquire the trade and assets of business B. In such a case the ‘merged’ business C is merely an enlarged version of business A.

Business A

As business A is deemed to continue then, on the assumption that there is no change in the accounting date, the partners in business A continue to be taxed on their share of business C’s profits as if business A had continued. The normal commencement rules apply to the previous partners in business B if they are now admitted to the partnership running business C. The partners will be taxed on their share of the profits arising from business C.

Business B

Business B ceases to exist in any form and the normal cessation rules apply to that business (see BIM82410).