Commentary on Sections Changes in partnership Section 1267: Various rules for trades and property businesses
3231.This section clarifies the position of firms that are affected by the rules in Chapter 14 of Part 3 or section 262 of this Act. It is based on paragraph 13 of Schedule 22 to FA 2002 (as applied to property businesses by section 21B of ICTA). The corresponding rule for income tax is in section 860 of ITTOIA.
3232.The section differs from its income tax equivalent because a positive adjustment on a change of basis is dealt with differently for income tax and corporation tax. For income tax, such an adjustment is the subject of a separate charge, in section 228 or 330 of ITTOIA. For corporation tax, the adjustment is treated as a trade or property business receipt and so is charged to tax under section 35 or 209.
3233.This section explicitly applies to property businesses. In ITTOIA the position is different because the extension to non-trade businesses in section 847 of ITTOIA does not apply to section 860. But section 860 of ITTOIA does apply to property businesses as a result of section 272(1) of ITTOIA, because the restriction in section 272(2) does not exclude rules outside Part 2 such as those in Chapter 7 of Part 3 of ITTOIA. Schedule 1 to this Act amends section 860 of ITTOIA to clarify the income tax position, with a minor related amendment to section 847 of ITTOIA.