Basis of assessment ― change of accounting date

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Basis of assessment ― change of accounting date
  • The four-stage process
  • The year of change
  • Conditions for a valid change of accounting date

Special rules apply to calculate a trader’s taxable profits when he changes his accounting date. These special rules apply for unincorporated businesses only. The rules apply equally for businesses using the simplified cash basis. See the Simplified cash basis for small businesses guidance note.

See also Simon’s Taxes B4.110 (subscription sensitive).

A trader will change his accounting date when he draws up accounts for a period which is not 12 months long. In this case, the current year basis cannot apply in the usual way, so special rules are required to determine the taxable trading profits.

The change of accounting date rules will not apply in the year the trader commences or the year in which the trade ceases ― in these instances, the opening and closing year rules will apply. See the Basis of assessment ― opening years and Basis of assessment ― closing years guidance notes for more information.

When considering the change of accounting date rules, two basic principles must be remembered:

  • the basis period will never be less than 12 months long, and
  • HMRC will alwa

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