Annex 1: Minor changes in the law made by the Act: Change 54: Basis periods: treat accounts regularly prepared to dates near the end of the tax year as if prepared to 5 April subject to a taxpayer’s opt out: sections 208, 209 and 210
This change makes automatic, subject to a taxpayer’s right to opt out, the treatment under which accounts regularly prepared to dates near the end of the tax year are treated as if prepared to 5 April.
Change 55 gives statutory effect to the non-statutory practice described in paragraph 71170 of the Business Income Manual under which accounts prepared to 31 March (and 1, 2, 3 and 4 April) are treated as prepared to 5 April. That simplifies the operation of the rules by avoiding the creation of very short overlaps of basis periods - and therefore small amounts of overlap profit - during the first years of trading.
Most people with a late accounting date are likely to wish to take advantage of this rule. So section 208(3) makes it automatic unless the taxpayer “elects out”.
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.