Where a trader expands their business there are three possible
consequences, depending on the facts.
1. The new activity represents a new trade in addition to
their existing trade (
BIM70530)
Factors which would affect whether there were two trades
after the acquisition or one are:
If the new activity is a separate trade then the commencement
provisions (
BIM71045) will apply to the new
business. Both businesses will continue to be assessed separately
unless, as a matter of fact, they are merged to form a single
trade. Where that happens, the question will be whether the
combined business is a new one or not (BIM70595).
2. The new activity combined with the old represents a
completely new trade (
BIM70595)
In this situation the acquisition of new activities is on
such a scale, or brings about such a change to the nature of the
old business, that it means that the old business comes to an end.
The combination of the two activities represents an entirely new
trade in its own right.
The cessation provisions (BIM71120) will apply to the old
business. The commencement provisions will apply to all of the
profits from the new business.
3. The new activity combined with the old represents a
continuation of the old trade
If neither of the two previous situations applies then the
acquisition of the new activities has no effect on the basis of
assessment. The owner is simply carrying on the same trade as
before, but on a larger scale.
If the expansion involves the acquisition of another business
as a going concern then the question of succession may arise (
BIM70620).
