Finance Act 1994

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. U.K.

(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 [F1 after the end of—

(a) the basis period for the year 1996-97; or

(b) in the case of a trade or profession carried on by a person in partnership with other persons, the basis period of the partnership for that year,

and (in either case)] before 6th April 1997 were an overlap profit for the purposes of that section.

[F2 (4A) In calculating the amount of the profits or gains of the basis period for the year 1997-98 which arise as mentioned in sub-paragraph (4) above, any deduction of a capital allowance and any addition of a balancing charge shall be ignored.

(4B) Sub-paragraph (4A) above does not apply in the case of a trade or profession carried on by persons who include both an individual and a company.]

(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.

Textual Amendments

F1 Words in Sch. 20 para. 2(4) inserted (1.5.1995) by 1995 c. 4, s. 122(2)

F2 Sch. 20 para. 2(4A)(4B) inserted (1.5.1995) by 1995 c. 4, s. 122(3)

Modifications etc. (not altering text)

C1 Sch. 20 para. 2(2) modified (1.5.1995) by 1995 c. 4, s. 123, Sch. 22 paras. 1, 13, 14

C2 Sch. 20 para. 2(4) modified (1.5.1995) by 1995 c. 4, s. 123, Sch. 22 paras. 3, 12, 13, 14

Sch. 20 para. 2(4) modified (1.5.1995) by 1995 c. 4, s. 123, Sch. 22 paras. 5, 12