Annex 1: Minor changes in the law made by the Act: Change 56: Basis periods: to allow accounts regularly prepared to a particular day in the year to be treated as if prepared to a particular date: sections 211, 212 and 213
This change allows accounts regularly prepared to a particular day in the year to be treated as if prepared to a particular date. This avoids the need to apply complex change of accounting date provisions.
In the source legislation whenever there is a change of accounting date complex rules in sections 62 and 62A of ICTA are triggered. Those rules determine when - or whether - the basis period can align with the new accounting date.
For most taxpayers changes of accounting date are relatively infrequent. But it is sometimes more practical for taxpayers to prepare their accounts to a particular day in the year - a mean date - rather than to a particular date. Examples might include the last Friday in September or the last day of the summer term. Because the resulting accounting date will be different year by year the complex change of accounting date rules would normally apply to such changes.
Change 56 allows taxpayers to prepare their accounts to a mean date without triggering the change of accounting date rules, provided certain conditions are met.
This change gives statutory effect to the extra-statutory practice authorised in paragraph 71175 of the Business Income Manual.
This change is in taxpayers' favour in principle. But it is expected to have no practical effect as it is in line with current practice.