Income Tax (Trading and Other Income) Act 2005 section 215

Change of accounting date in third tax year

Section 215 sets out a special rule for determining the basis period when a trader changes their accounting date in the third tax year of their trade, and the new accounting date falls more than 12 months after the end of the previous basis period.

• This rule applies when a change of accounting date occurs in the third tax year of a trade, the trader has not permanently ceased trading in that year, and the new accounting date is more than 12 months after the end of the basis period for the second tax year.
• The basis period for the third tax year starts immediately after the end of the basis period for the second tax year.
• The basis period for the third tax year ends on the new accounting date in that third tax year.
• No additional conditions need to be met for the change to be effective for tax purposes in the third year, unlike changes occurring after the third year which must satisfy further requirements.