If a basis period does not exactly match a period of accounts it will be necessary to apportion profits. The simplest illustration is probably that of a business that is just starting. If the business begins on, say, 1 March and draws up accounts for the first 10 months to 31 December, it will be necessary to apportion the profits shown by those accounts to determine how much is to be taxed in the first tax year. In other words, a calculation must be made to find a notional figure of profits arising in the period from 1 March to 5 April.
The legislation (ITTOIA 2005, s. 203(2)(a)) specifically allows profits to be apportioned to different parts of the period of accounts.
Want to read more?
This content requires a Croner-i Tax and Accounting subscription.