Income and Corporation Taxes Act 1988

Valid from 11/05/2001

How averaging claim is given effect U.K.

7 (1) An averaging claim relating to two tax years (“the earlier year” and “the later year”) is given effect in the later year.

(2) In so far as the claim involves an adjustment to the profits for the earlier year it is treated as a claim for the amount of the difference between—

(a) the amount in which the taxpayer is chargeable to tax for the earlier year (“amount A”), and

(b) the amount in which he would be so chargeable if effect were given to the adjustment in that year (“amount B”).

(3) That claim is given effect in the later year by increasing the amount referred to in section 59B(1)(b) of the Management Act (aggregate amount of payments on account made by the taxpayer) or, as the case may require, by increasing the amount of tax payable.

(4) Where effect falls to be given to two or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the other claim or claims in relation to the earlier year.

(5) Where this paragraph applies twice in relation to the same tax year, the increase or reduction in the amount of tax payable for that year as a result of the earlier application shall be disregarded in determining amounts A and B above for the purposes of the later application.