Income and Corporation Taxes Act 1988

96 Farming and market gardening: relief for fluctuating profits. U.K.

(1) M1 Subject to the provisions of this section, a person who is or has been carrying on a trade of farming or market gardening in the United Kingdom may claim that subsection (2) or (3) below shall have effect in relation to his profits from that trade for any two consecutive years of assessment if his profits for either year do not exceed such part of his profits for the other year as is there specified.

(2) If the claimant’s profits for either year do not exceed seven-tenths of his profits for the other year or are nil, his profits for each year shall be adjusted so as to be equal to one-half of his profits for the two years taken together or, as the case may be, for the year for which there are profits.

(3) If the claimant’s profits for either year exceed seven-tenths but are less than three-quarters of his profits for the other year, his profits for each year shall be adjusted by adding to the profits that are lower and deducting from those that are higher an amount equal to three times the difference between them less three-quarters of those that are higher.

(4) No claim shall be made under this section—

(a) in respect of any year of assessment before a year in respect of which a claim has already been made under this section; or

(b) in respect of a year of assessment in which the trade is (or by virtue of section 113(1) is treated as) set up and commenced or permanently discontinued.

(5) Any adjustment under this section shall have effect for all the purposes of the Income Tax Acts (including any further application of this section where the second of any two years of assessment is the first of a subsequent pair) except that—

(a) subsection (2) above shall not prevent a person obtaining relief under those Acts for a loss sustained by him in any year of assessment;

(b) any adjustment under this section shall be disregarded for the purposes of section 63(1)(b); and

(c) where, after a claim has been made under this section in respect of the profits for any two years of assessment, the profits for both or either of those years are adjusted for any other reason, this section shall have effect as if the claim had not been made but without prejudice to the making of a further claim in respect of those profits as so adjusted.

(6) This section applies to the profits of a trade carried on by a person in partnership as it applies to the profits of a sole trader F1 . . . .

(7) In this section references to profits from a trade for a year of assessment are references to the profits or gains from that trade which are chargeable to income tax for that year before—

(a) any deduction for losses sustained in any year of assessment;

(b) F2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) any deduction for relief under Schedule 9 to the Finance Act 1981 (stock relief).

(8) Any claim under this section shall be made by notice given to the inspector not later than [F3 twelve months from the 31st January next following] the second of the years of assessment to which the claim relates but any such further claim as is mentioned in subsection (5)(c) above shall not be out of time if made [F4 before the 31st January next following] the year of assessment following that in which the adjustment is made.

[F5 (9) Where a person makes a claim under this section, any claim by him for relief under any other provision of the Income Tax Acts for either of the two years of assessment—

(a) shall not be out of time if made before the end of the period during which the claim under this section is capable of being revoked; and

(b) if already made, may be amended or revoked before the end of that period;

and, in relation to a claim made by being included in a return, any reference in this subsection to amending or revoking the claim is a reference to amending the return by amending or, as the case may be, omitting the claim.]

(10) There shall be made all such alterations of assessments or repayments of tax (whether in respect of such profits as are mentioned in subsection (1) above or of other income of the person concerned) as may be required in consequence of any adjustment under this section.

(11) Nothing in this section shall be construed as applying to profits chargeable to corporation tax [F6 or to any profits or gains chargeable to income tax under Schedule A.]

(12) This section applies where the first of the two years mentioned in subsection (1) above is the year 1987-88 or a subsequent year of assessment.

Textual Amendments

F1 Words in s. 96(6) repealed (with effect in accordance with ss. 215(4)(5), 216(5) of the repealing Act) by Finance Act 1994 (c. 9), s. 216(3)(a), Sch. 26 Pt. 5(24), Note 2 (with Sch. 20) (as s. 215(5) of that Act is modified (1.5.1995) by 1995 c. 4, s. 125(1))

F2 S. 96(7)(b) repealed (with effect in accordance with s. 214(7) of the repealing Act) by Finance Act 1994 (c. 9), s. 214(1)(a), Sch. 26 Pt. 5(24), Note 3 (with Sch. 20)

F3 Words in s. 96(8) substituted (with effect in accordance with s. 199(2), Sch. 19 para. 37(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 19 para. 37(1)(a)

F4 Words in s. 96(8) substituted (with effect in accordance with s. 199(2), Sch. 19 para. 37(2) of the amending Act) by Finance Act 1994 (c. 9), Sch. 19 para. 37(1)(b)

F5 S. 96(9) substituted (with effect in accordance with s. 128(11) of the amending Act) by Finance Act 1996 (c. 8), s. 128(3)

F6 Words in s. 96(11) inserted (with effect in accordance with s. 39(4)(5) of the amending Act) by Finance Act 1995 (c. 4), Sch. 6 para. 15

Modifications etc. (not altering text)

C1 S. 96(8) modified for the year of assessment 1988-89 by S.I. 1991/851, regs. 1(1), 9, Sch.2.

S. 96(8) modified for the year of assessment 1989-90 by S.I. 1992/511, regs. 1(1), 9, Sch.2.

S. 96(8) applied (with modifications) for the year of assessment 1990-91 by S.I. 1993/415, regs. 1(1), 9, Sch.2

C2 S. 96(8) modified (5.4.1994 with effect in accordance with reg. 1 of the modifying S.I.) by The Lloyd's Underwriters (Tax) (1991-92) Regulations 1994 (S.I. 1994/728) {reg. 9}, Sch. 2

C3 S. 96(8) modified (9.3.1995 with effect in accordance with regs. 14(2), 15(2) of the modifying S.I.) by The Lloyd's Underwriters (Tax) (1992-93 to 1996-97) Regulations 1995 (S.I. 1995/352), regs. 14(1), 15(1), Sch.

Marginal Citations

M1 SOURCE-1978 s. 28; 1981 s. 35(4)