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Income Tax (Trading and Other Income) Act 2005

Section 223: Adjustment of profits

912.This section sets out the way in which the profits of each of the two tax years for which a claim is made are adjusted. It is based on section 96 of and Schedule 4A to ICTA. It also includes a signpost to Schedule 1B to TMA.

913.There are two methods for adjusting the profits.

914.Subsection (3) sets out the first method. The profits of the two years are added together and then averaged.

915.Subsection (4) sets out the second method. The subsection uses a method statement to show how a more complex calculation is made. The aim is to achieve a straight line taper from a full adjustment when the profits differ by 30% to no adjustment when they differ by 25%.

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