Trade profits if there is a transition part of the basis period for the tax year 2023-24
70(1)Sub-paragraph (2) applies if there is a transition part of the basis period for the tax year 2023-24 (see paragraphs 65(3) and 67(4)(a)).
(2)In calculating the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005, take the following Steps.
Step 1
Determine the amount of the profits of the tax year 2023-24 attributable to the standard part of the basis period for that tax year.
To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the standard part of the basis period for that tax year.
Step 2
Determine the amount of the profits of the tax year 2023-24 attributable to the transition part of the basis period for that tax year.
To do this, apply Chapter 2 of Part 2 of ITTOIA 2005 as if references in that Act to the basis period for the tax year 2023-24 were to the transition part of the basis period for that tax year.
Step 3
Deduct from the amount given by Step 2 the amount of any deduction for overlap profit allowed under this Part of this Schedule (see paragraph 68).
Step 4
Calculate the sum of the amounts given by Steps 1 and 3.
If the amount given by either or both of—
(a)Step 3, and
(b)this Step,
is nil, or less than nil, the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is the amount given by this Step (and see paragraph 71 for the treatment of a loss, or an increased loss, for the tax year 2023-24 arising from this Step).
Otherwise, proceed to Steps 5 and 6.
Step 5
For the purposes of Step 6, and paragraphs 72 to 75, the amount of the trader’s “transition profits” for the tax year 2023-24 is the lesser of—
(a)the amount given by Step 3, and
(b)the amount given by Step 4.
Step 6
The amount of the profits of the tax year 2023-24 for the purposes of Chapter 2 of Part 2 of ITTOIA 2005 is—