Income Tax (Trading and Other Income) Act 2005 section 238

Spreading on ending of exemption for barristers and advocates

Section 238 provides a special rule for how adjustment income is spread over time when barristers and advocates lose their previous exemption from the change-of-basis rules.

• When a barrister or advocate has adjustment income arising from a change of accounting basis, it is spread over ten tax years rather than being taxed all at once.
• In any single year, the amount charged to tax is capped at a maximum level, preventing an excessive tax burden in one period.
• This spreading rule applies specifically to barristers and advocates because they practise as sole practitioners, not in partnership, so the partnership-related spreading rules do not apply to them.
• There is also a historical dimension: an earlier spreading rule under the Finance Act 1998 may still affect current liabilities if they include part of an adjustment arising before 2001, since the repeal of that earlier rule only took effect for changes of basis on or after 1 August 2001.