Related Commentary  

220(1)  This section applies for the purpose of calculating the profits of a trade of a tax year if–

(a)a change of accounting date occurs in the tax year, and

(b)the basis period for the tax year is longer than 12 months.

220(2)  A deduction must be made for overlap profit.

220(3)  The amount of the deduction is calculated as follows.

Step 1

Add together the overlap profit arising in all overlap periods ending before the end of the tax year.

Step 2

Subtract from that any deductions made under this section for previous tax years.

The balance is “the remaining overlap profit”.

Step 3

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