C1Part 3Trading income

Annotations:
Modifications etc. (not altering text)

Chapter 14Adjustment on change of basis

Adjustment on change of basis

180Application of Chapter

1

This Chapter applies if—

a

a company carrying on a trade changes, from one period of account to the next, the basis on which profits of the trade are calculated for corporation tax purposes,

b

the old basis accorded with the law or practice applicable in relation to the period of account before the change, and

c

the new basis accords with the law and practice applicable in relation to the period of account after the change.

2

The practice applicable in any case means the accepted practice in cases of that description as to how profits of a trade should be calculated for corporation tax purposes.

3

A company changes the basis on which profits of a trade are calculated for corporation tax purposes if the company makes—

a

a F1change of accounting policy (see subsection (4)), or

b

a change in the tax adjustments applied (see subsections (5) and (6)).

F24

A “change of accounting policy” includes, in particular—

a

a change from using UK generally accepted accounting practice to using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards, and

b

a change from using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards to using UK generally accepted accounting practice.

5

A “tax adjustment” means any adjustment required or authorised by law in calculating profits of a trade for corporation tax purposes.

6

A “change in the tax adjustments applied”—

a

does not include a change made in order to comply with amending legislation not applicable to the previous period of account, but

b

includes a change resulting from a change of view as to what is required or authorised by law or as to whether any adjustment is so required or authorised.