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HMRC internal manual

Business Income Manual

Averaging: amendments to profits: reasons other than averaging: averaging claim in place

S225 Income Tax (Trading and Other Income) Act 2005

Averaging claim made

Where, the profits for any of the averaged years are amended for any reason other than the making of an averaging claim, the averaging claim is to be ignored. This may occur, for example:

  • where a claim for recovery of overpaid tax is accepted
  • where HMRC discovers that additional trading profits are to be assessed.

However, a new claim for averaging may then be made in respect of these years.  The time limit for making such a further claim is 31 January next following the end of the tax year in which the amendment was made.

Where, as a consequence of this further claim, scope for averaging newly occurs for subsequent years, a further claim for those years may be admitted. Consequential averaging claims for years earlier than the years covered by the further claim are not available.

See an example of this at BIM84230.

No averaging claim made

In a situation where the option to elect for averaging was not exercised and the profits for any of the years are amended, for any reason other than the making of an averaging claim, say after an enquiry, the impact of a subsequent averaging claim is restricted to the amount of the adjustment to the profits.

See an example of this at BIM84240.