Corporation Tax Act 2009 section 186

Election for spreading if section 185 applies

Section 186 allows a company that has changed from a realisation basis to a mark-to-market basis to elect to spread the resulting adjustment receipt over six periods of account, rather than recognising it all at once.

• Where a change to mark-to-market accounting produces an adjustment receipt under section 185, the company may elect to spread that receipt equally over six periods of account
• The election must be made within 12 months of the end of the first accounting period to which the new basis applies
• If an election is made, one-sixth of the receipt is brought into account in each of the six periods of account, starting with the first period under the new basis
• If the company permanently ceases trading before all six instalments have been recognised, the entire remaining balance must be brought into account immediately before cessation