Income Tax (Trading and Other Income) Act 2005 section 218

Commercial reasons for change of accounting date

Section 218 sets out how HMRC may challenge whether a change of accounting date has been made for genuine commercial reasons, and the rights of appeal available to the taxpayer.

• A change of accounting date is automatically treated as made for commercial reasons unless HMRC issue a notice stating otherwise within 60 days of receiving the taxpayer's notification under section 217
• If HMRC do issue such a notice, the change is treated as made for non-commercial reasons, but the taxpayer may appeal within 30 days of receiving the notice
• On appeal, the tribunal may either set aside the notice (if satisfied the change was commercially motivated) or confirm it (if not satisfied)
• Obtaining a tax advantage does not count as a commercial reason for changing an accounting date