Income and Corporation Taxes Act 1988

110 Interpretation etc. U.K.

(1) M1 The following provisions have effect for the purposes of [F1 sections 103 to 109A].

(2) M2 For the purposes of those sections, any reference to the permanent discontinuance of a trade, profession or vocation includes a reference to the occurring of [F2 —

(a) any event which, under section 113 or 337(1), is to be treated as equivalent to the permanent discontinuance of a trade, profession or vocation; or

(b) in relation to a trade or profession carried on by a person in partnership with other persons, any event which, under subsection (4) of section 111, is to be treated as equivalent to the permanent discontinuance of his deemed trade or profession (within the meaning of that subsection)].

(3) M3 The [F3 profits] of a trade, profession or vocation in any period shall be treated as computed by reference to earnings where all credits and liabilities accruing during that period as a consequence of its being carried on are brought into account in computing those [F3 profits] for tax purposes, and not otherwise, and “earnings basis” shall be construed accordingly.

(4) “Conventional basis” has the meaning given by section 103(2), so that [F3 profits] are computed on a conventional basis if computed otherwise than by reference to earnings.

(5) There is a change from a conventional basis to the earnings basis at the end of a period the [F3 profits] of which were computed on a conventional basis if the [F3 profits] of the next succeeding period are computed by reference to earnings; and, if the [F3 profits] of two successive periods are computed on different conventional bases, a change of conventional basis occurs at the end of the earlier period.

(6) In sections 103 and 104—

(a) “trading stock” has the meaning given by section 100(2);

(b) references to work in progress at the discontinuance of a profession or vocation, and to the transfer of work in progress, are to be construed in accordance with section 101(3); and

(c) the reference to work in progress at the time of a change of basis is also to be construed in accordance with section 101(3), substituting therein for this purpose references to the change of basis for references to the discontinuance.

Textual Amendments

F1 Words in s. 110(1) substituted (with effect in accordance with s. 90(7) of the amending Act) by Finance Act 1995 (c. 4), s. 90(3)

F2 Words in s. 110(2) substituted (with effect in accordance with s. 215(4) of the 1994 amending Act) by Finance Act 1994 (c. 9), s. 215(1A) (as inserted (retrospectively) by Finance Act 1995 (c. 4), s. 117(1)(c)(3))

F3 Words in s. 110(3)(4)(5) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a)(b), Sch. 7 para. 1

Marginal Citations

M1 Source—1970 s.151(1)

M2 Source—1970 s.146

M3 Source—1970 s.151(2)-(5)