Income Tax (Trading and Other Income) Act 2005 section 31A

Conditions to be met for profits to be calculated on cash basis

Section 31A sets out the three conditions (A to C) that an individual must satisfy in order to be eligible to elect to calculate their trading profits on the cash basis under section 25A.

• The total cash basis receipts for each trade, profession or vocation the individual carries on in the tax year must not exceed the relevant maximum amount for that year, as set out in section 31B.
• Where the individual controls a firm, or a firm is controlled by an individual, the combined cash basis receipts from all trades, professions or vocations carried on by the individual or firm must also not exceed the relevant maximum, and both the individual and the firm must have elected to use the cash basis for that year.
• The individual must not be an excluded person for the tax year in question, as defined by section 31C.
• Cash basis receipts are defined as receipts that are received during the basis period for the tax year and are taken into account when calculating the profits of the trade, profession or vocation on a cash basis for that year.

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