The basis of assessment for year 2 is dependent on the choice of accounting date. Five possibilities arise:

(1)the business ends in year 2;

(2)the accounting date in year 2 falls less than 12 months from commencement;

(3)the accounting date in year 2 falls not less than 12 months from commencement;

(4)there is a change of accounting date in year 2;

(5)there is no accounting date in year 2.

Business ceases in the year

If a person starts trading in one tax year and ceases trading in the next, the basis period for that second year will be the period from 6 April at the start of the second year to the date of cessation of trading (ITTOIA 2005, s. 202(2)). This may be referred to as an ‘actual basis’.

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