Income Tax (Trading and Other Income) Act 2005 section 225

Effect of later adjustment of profits

Section 225 deals with what happens when profits that were the subject of an averaging claim are subsequently adjusted for a separate reason.

• If profits covered by an existing averaging claim are later adjusted for another reason, the original averaging claim is disregarded.
• The taxpayer is not prevented from making a fresh averaging claim based on the newly adjusted profit figures.
• A further averaging claim will be treated as in time provided it is made within one year of the normal self-assessment filing date for the tax year in which the other adjustment is made.
• This ensures that taxpayers are not penalised by the standard 22-month time limit when a later adjustment disrupts an earlier averaging claim.