Annex 1: Minor Changes in the Law Change 104: Amendments of CAA: Schedule 1 Section 577 of CAA
Following the repeal of sections 114(1) and 337(1) of ICTA (and the corresponding income tax rule in section 113(1) of ICTA) there is no longer any rule that treats an event as the equivalent of the setting up, commencement or discontinuance of a trade etc. The new subsections (2A) to (2C) set out how the rules work. Subsection (2B) sets out the income tax rule that should have been inserted by ITTOIA.
It is difficult to predict how the courts would interpret these provisions for income tax following the ITTOIA amendments. In general, treating an event as a cessation of a trade etc changes the tax liabilities of those carrying on the trade etc before and after the event: a reduction for one is balanced by an increase for the other.
This change is in principle and in practice adverse to some taxpayers and favourable to others. But the numbers affected and the amounts involved are likely to be small.