Commentary on Sections Overview Section 860: Adjustment income
3230.This section sets out the rules for taxing adjustment income when a trade is carried on in partnership. It is based on paragraph 13 of Schedule 22 to FA 2002.
3231.Subsection (1) provides that there can be a change of basis at the same time as a partial change in the membership of the firm.
3232.Subsection (3) ensures that the adjustment income rules are applied to the firm, rather than to the individual partners.
3233.Subsection (7) ensures that the special rules in this section apply instead of the main partnership rules. In particular, the income is allocated between the partners in accordance with subsection (2) instead of section 850. And the charge is on income treated as arising on the last day of the new period of account in accordance with section 232 of this Act instead of by reference to the basis period rules in sections 852 and 853.