BIM71050 - Computation of liability: basis periods - commercial reasons for change of accounting date

Where a change of accounting date takes place in Year 4 or later years of trading three conditions must be met for the basis period for the year of change to end with the new accounting date, see BIM71045. One of these conditions is that, where there has been an earlier change of accounting date (which resulted in a change of basis period) in the previous 5 years, the latest change must be made for commercial reasons.

If you consider that a change of accounting date has not been made for commercial reasons you must give notice of this to the person carrying on the trade within the period of 60 days beginning with the date that the SA return (setting out the reasons for the change) was received.

Obtaining a tax advantage is not a commercial reason (ITTOIA05/S218 (6)).

If a notice is not issued within the 60 day period the change of accounting date is treated as being made for commercial reasons.

If a notice is issued, the person carrying on the trade has 30 days from the date the notice is given to appeal against it. The Commissioners must then decide whether the change was made for commercial reasons or not.