Income Tax (Trading and Other Income) Act 2005 section 208

When the late accounting date rules apply

Section 208 sets the scene for the late accounting date rules, which simplify the basis period rules for traders whose first accounting date falls close to the end of the tax year, avoiding very short overlaps and small amounts of overlap profit.

• The rules apply automatically where a trader's first accounting date is 31 March or 1–4 April and falls in the tax year trading begins or the next two tax years, but the trader can elect out
• The purpose is to avoid apportioning profits and to prevent overlap profit arising in the opening years of a trade
• The first accounting date means either the actual first accounting date after trading starts, or the intended accounting date if no actual date exists at the time of filing
• An election to opt out must be made by the first anniversary of the normal self-assessment filing date for the relevant tax year