A change of accounting date which takes place in tax years 1, 2
or 3 following commencement of trading always has the effect of
changing the basis period for that year.
The conditions which have to be met for changes of
accounting date in year 4 and later years to be effective (see
BIM71045) do not apply to changes which occur in years 1, 2 or
3.
The normal basis period rules for Year 1 apply, see BIM71015. The basis period for Year 1 is always the period from the date that the trade commenced to 5 April at the end of Year 1.
The normal basis period rules for Year 2 apply, see BIM71015. The basis period for Year 2 is:
Where no accounts end in Year 2, and the accounting dates in Years 1 and 3 are not the same, there is a change of accounting date in Year 2. This is because Year 2 is the first tax year in which accounts are not drawn up to the old accounting date, see BIM71035.
If the new accounting date in Year 3 is 12 months or less after
the end of the basis period for Year 2, the basis period for Year 3
is 12 months to the accounting date in Year 3, see
BIM71015.
If the new accounting date in Year 3 is more than 12 months
after the end of the basis period for Year 2, under ITTOIA05/S215
the basis period for Year 3:
A new trade starts on 1 July 2008 and prepares its first
accounts to 31 December 2008. The second accounts involve a change
of accounting date to 30 September 2009 and accounts are prepared
to 30 September each year thereafter.
The basis periods are:
| 2008-2009 | Year 1 | 9 months from 1 July 2008 to 5 April 2009 |
| 2009-2010 | Year 2 | 12 months to 30 September 2009 |
| 2010-2011 | Year 3 | 12 months to 30 September 2010 |
The basis period for 2009-2010 is 12 months to the accounting
date in Year 2 (30 September 2009) as that date is 12 months or
more after the date of commencement.
The 6 month period from 1 October 2008 to 5 April 2009 is an
overlap period. The profits for this overlap period will qualify
for overlap relief in a later year, see
BIM71075.
A new trade starts on 1 July 2008 and prepares its first
accounts to 31 December 2008. The second accounts involve a change
of accounting date to 30 April 2009 and accounts are prepared to 30
April thereafter.
The basis periods are:
| 2008-2009 | Year 1 | 9 months from 1 July 2008 to 5 April 2009 |
| 2009-2010 | Year 2 | 12 months to 30 June 2009 |
| 2010-2011 | Year 3 | 12 months to 30 April 2010 |
| 2011-2012 | Year 4 | 12 months to 30 April 2011 |
The basis period for 2009-2010 is the 12 months from
commencement. Although there has been a change of accounting date
in Year 2, the new date (30 April 2009) falls less than 12 months
after trading commenced on 1 July 2008.
The 9 month period from 1 July 2008 to 5 April 2009 is an
overlap period. The profits for this overlap period will qualify
for overlap relief in a later year, see
BIM71075.
The basis period for 2010-2011 (Year 3) is 12 months to the
accounting date in 2010-2011 as this is 12 months or less after the
end of the basis period for Year 2.
The 2 month period from 1 May 2009 to 30 June 2009 is also
an overlap period. The profits for this overlap period will qualify
for overlap relief in a later year, see
BIM71075.
Example 3 – change of accounting date in Year 2
– accounts not prepared to a date in Year 2
A new trade starts on 1 July 2008 and prepares its first
accounts to 31 December 2008. The second accounts involve a change
of accounting date to 30 April 2010 and accounts are prepared to 30
April thereafter.
The basis periods are:
| 2008-2009 | Year 1 | 9 months from 1 July 2008 to 5 April 2009 |
| 2009-2010 | Year 2 | 12 months to 30 June 2009 |
| 2010-2011 | Year 3 | 12 months to 30 April 2010 |
| 2011-2012 | Year 4 | 12 months to 30 April 2011 |
There is a change of accounting date in 2009-2010, the first
year to which accounts are not prepared to the old accounting date
of 31 December. As no accounts are drawn up to a date in 2009-2010,
the accounting date for that year is 30 April 2009, the date in
2009-2010 which corresponds to the new date (30 April) to which
accounts will be drawn up in later years.
The basis period for 2009-2010 is the 12 months from
commencement. Although there has been a change of accounting date
in Year 2 the new date (30 April 2009) falls less than 12 months
after trading commenced on 1 July 2008.
The 9 month period from 1 July 2008 to 5 April 2009 is an
overlap period. The profits for this overlap period will qualify
for overlap relief in a later year, see
BIM71075.
The basis period for 2010-2011 (Year 3) is 12 months to the
accounting date in 2010-2011 as this is 12 months or less after the
end of the basis period for Year 2.
The 2 month period from 1 May 2009 to 30 June 2009 is also
an overlap period. The profits for this overlap period will qualify
for overlap relief in a later year, see
BIM71075.
A new trade starts on 1 October 2010 and prepares its first
accounts to 30 September 2011. The second accounts are prepared for
9 months from 1 October 2011 ro 30 June 2012
The basis periods are:
| 2010-2011 | Year 1 | 6 months from 1 October 2010 to 5 April 2011 |
| 2011-2012 | Year 2 | 12 months to 30 September 2011 |
| 2012-2013 | Year 3 | 12 months to 30 June 2012 |
Because the accounts to the new accounting date in Year 3 are
for less than 12 months, the basis period for Year 3 is 12 months
to the new accounting date in Year 3 (30 June 2012).
The 6 month period from 1 October 2010 to 5 April 2011 is an
overlap period. The profits for this overlap period will qualify
for overlap relief in a later year, see
BIM71075.
The 3 month period from 1 July 2011 to 30 September 2011 is
also an overlap period. The profits for this overlap period will
qualify for overlap relief in a later year, see
BIM71075.
A new trade starts on 1 July 2008 and prepares its first
accounts for 11 months to 31 May 2009. The second accounts are
prepared for 18 months from 1 June 2009 to 30 November 2010.
The basis periods are:
| 2008-2009 | Year 1 | 9 months from 1 July 2008 to 5 April 2009 |
| 2009-2010 | Year 2 | 12 months to 30 June 2009 |
| 2010-2011 | Year 3 | 17 months from 1 July 2009 to 30 November 2010 |
| 2011-2012 | Year 4 | 12 months to 30 November 2011 |
Because the accounts to the new accounting date in Year 3 are
for more than 12 months, the basis period for Year 3 begins
immediately after the basis period for Year 2 and ends with the new
accounting date in Year 3.
The 9 months period from 1 July 2008 to 5 April 2009 is an
overlap period. The profits for this overlap period will qualify
for overlap relief in a later year.
As the basis period for 2010-11 is longer than 12 months (by
5 months), overlap relief for 5 months worth of the 9 months
overlap profits can be given in 2010-2011, see
BIM71090.
