Finance Act 1994

Assessment under Cases I and II of Schedule D

1 (1) Subject to paragraph 3(2) below, this paragraph applies in the case of a trade, profession or vocation set up and commenced before 6th April 1994 and continuing after 5th April 1997.

(2) The basis period for the year 1996-97 shall be as follows—

(a) where an accounting date falls within the year, the period of twelve months ending with that accounting date; and

(b) in any other case, the period of twelve months ending with 5th April 1997.

(3) Where the basis period for the year 1996-97 is given by paragraph (b) of sub-paragraph (2) above, section 62 of the Taxes Act 1988 shall have effect in relation to the accounting change by virtue of which that paragraph applies as if that change were made in the first year of assessment in which accounts are made up to the new date.

(4) In this paragraph “accounting date” and “the new date” have the same meanings as in section 62 of the Taxes Act 1988.

2 (1) Subject to paragraph 3(2) and (4) below, this paragraph applies in the case of a trade, profession or vocation set up and commenced before 6th April 1994 and continuing after 5th April 1997.

(2) Subject to sub-paragraph (3) below, sections 60 to 63A of the Taxes Act 1988 shall have effect in relation to the year 1996-97 as if they required income tax under Case I or II of Schedule D to be charged on the appropriate percentage of the aggregate of—

(a) the full amount of the profits or gains of the basis period for that year, and

(b) the full amount of the profits or gains of the relevant period.

(3) Where, in the case of the year 1995-96, the period on the profits or gains of which income tax is chargeable under Case I or II of Schedule D is that year, sub-paragraph (2) above shall have effect as if for the words from “the appropriate percentage” to the end there were substituted the words “the full amount of the profits or gains of that year”.

(4) Section 63A of the Taxes Act 1988 shall have effect as if the amount of profits or gains of the basis period for the year 1997-98 which arise before 6th April 1997 were an overlap profit for the purposes of that section.

(5) In this paragraph—

• “the appropriate percentage” means the following expressed as a percentage, that is, 365 divided by the number of days in the basis period for the year 1996-97 and the relevant period taken together;

• “the relevant period” means the period which—

  (a)

  begins immediately after the end of the period on the profits or gains of which tax is chargeable for the year 1995-96, and

  (b)

  ends immediately before the beginning of the basis period for the year 1996-97.

3 (1) In the case of a trade, profession or vocation set up and commenced before 6th April 1994 and ceasing before 6th April 1997, sections 60 to 63 of the Taxes Act 1988 shall have effect as if sections 200 to 205 of this Act had not been enacted.

(2) If, in the case of a trade, profession or vocation set up and commenced before 6th April 1994 and ceasing on or after 6th April 1997 but before 6th April 1998, an officer of the Board so directs—

(a) paragraphs 1 and 2 above shall not apply, and

(b) sections 60 to 63 of the Taxes Act 1988 shall have effect as if sections 200 to 205 of this Act had not been enacted.

(3) Sub-paragraph (4) below applies where, in the case of a trade, profession or vocation set up and commenced before 6th April 1994 and ceasing on or after 6th April 1998 but before 6th April 1999, the profits or gains arising in the year 1996-97 exceed—

(a) the amount on which income tax has been charged for that year; or

(b) the amount on which income tax would have been charged for that year if no deduction or set-off under section 385 of the Taxes Act 1988 had been allowed.

(4) Notwithstanding anything in sections 60 to 63A of the Taxes Act 1988, if an officer of the Board so directs, income tax for the year 1996-97 shall be charged instead, but subject to any deduction or set-off under section 385 of that Act, on the amount of the profits or gains arising in that year.

(5) All such adjustments shall be made, whether by way of an assessment to tax or a reduction or discharge of such an assessment or otherwise, as may be necessary to give effect to a direction under sub-paragraph (2) or (4) above.