BIM72420 - Partnerships: Mergers: Basis of Assessment of Merged Business

For cases falling within BIM72415 (1) and (2) you assess the merged business on either a continuing basis or a commencement basis depending on the circumstances.

But for merger cases falling within BIM72415 (3) you may have to calculate the assessable profits of the merged business by reference to two different basis periods - the mixed basis period treatment.

You apply this mixed basis period treatment where

• you assess one part of the merged business on a continuation basis and the other on a commencement basis, or
• the two original businesses have different accounting dates, or
• one of the two original businesses has only recently commenced.

For any year in which the mixed basis period treatment applies you must treat the merged business as if it were still made up of two businesses. Each such component of the merged business must correspond with a business that existed prior to the merger. You apportion the profits of the business between each component on a just and reasonable basis (for example by reference to turnover). Then you apply the continuation basis or the commencement basis as appropriate to each component. Once computed you then combine and assess the two components of profits in a single figure.