Income Tax (Trading and Other Income) Act 2005 section 219

The year after an ineffective change of accounting date

Section 219 deals with what happens in the tax year following a year in which a trader changed their accounting date but that change did not actually alter the basis period used to calculate their taxable profits.

• This section applies where a change of accounting date occurred in the previous tax year but the basis period for that year still ended on the old accounting date, meaning the change was ineffective
• If the trader keeps the new accounting date in the following tax year, the change is treated as though it first occurred in that later year, giving a fresh opportunity to meet the conditions for an effective change of basis period
• If the trader reverts to the old accounting date in the following tax year, that reversion is completely disregarded for the purposes of the accounting date change rules
• These provisions ensure that the basis period rules continue to work properly after an ineffective change, whether the trader persists with the new date, reverts to the old one, or chooses a different date altogether