Section 65 Cases I and II: basis of assessment
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(1) Subject to this Chapter, income tax shall be charged under Case I or II of Schedule D on the full amount of the profits or gains of the year of assessment.
(2) Where in the case of any trade or profession it has been customary to make up accounts-
(a) if only one account was made up to a date within the year of assessment and that account was for a period of one year, the profits or gains of the year ending on that date shall be taken to be the profits or gains of the year of assessment;
(b) if an account, other than an account to which paragraph (a) applies, was made up to a date in the year of assessment, or if more accounts than one were made up to dates in the year of assessment, the profits or gains of the year ending on that date or on the last of those dates, as the case may be, shall be taken to be the profits or gains of the year of assessment;
(c) in any other case, the profits or gains of the year of assessment shall be determined in accordance with subsection (1).
(3) Where the profits or gains of a year of assessment have been computed on the basis of a period in accordance with paragraph (b) or (c) of subsection (2) and the profits of the corresponding period relating to the preceding year of assessment exceed the profits or gains charged to income tax for that year, then, [notwithstanding anything to the contrary in section 66(2),]1 the profits of that corresponding period shall be taken to be the profits or gains of that preceding year of assessment and the assessment shall be amended accordingly.
Amendments
1 Inserted by Finance Act 2003 section 11.
What happens if I change my accounting date?
(3) If you use the basis period in (2)(b) or (c) for computing your taxable profits, and your profits for the corresponding period in the previous tax year exceed your profits in the current year, your profits for the corresponding period are "revise...
(3A) As respects the year of assessment 2001, subsection (2) shall apply as if in both paragraph (a) and paragraph (b) of that subsection "74 per cent of the profits or gains of the year ending on that date" were substituted for "the profits or gains of the year ending on that date".
Amendments
Subs (3A) inserted by Finance Act 2001 section 77(2) and Schedule 2 para 2.
(3B) For the purposes of subsection (2)(a), an account made up for a period of one year to a date falling in the period from 1 January 2002 to 5 April 2002 shall, in addition to being an account made up to a date in the year of assessment 2002, be deemed to be an account for a period of one year made up to a date within the year of assessment 2001, and the corresponding period in relation to the year of assessment 2000-2001 for the purposes of subsection (3) shall be determined accordingly.
Amendments
Subs (3B) inserted by Finance Act 2001 section 77(2) and Schedule 2 para 2.
What if my accounts period ends between 1 January 2002 and 6 April 2002?
(3B) An accounts year ending in the period 1 January 2002 to 6 April 2002, forms the basis of assessment for 2002, but also (scaled back to 74%) for the short tax year 2001. If you need to adjust your profits for 2000-01 under (3), you should use the...
(3C) Notwithstanding subsection (3), where the profits or gains of the year of assessment 2001 have been taken to be the full amount of the profits or gains of that year of assessment in accordance with subsection (2)(c), and the full amount of the profits or gains of the year of assessment 2000-2001 exceed the profits or gains charged to income tax for that year of assessment, then, the profits or gains of the year of assessment 2000-2001 shall be taken to be the full amount of the profits or gains of that year of assessment and the assessment shall be amended accordingly.
Amendments
Subs (3C) inserted by Finance Act 2001 section 77(2) and Schedule 2 para 2.
(3D) Notwithstanding subsection (3), where the profits or gains of a period of one year ending in the year of assessment 2002 have been taken to be the profits or gains of that year of assessment in accordance with subsection (2)(b), and the profits or gains charged to income tax for the year of assessment 2001 are less than 74 per cent of the profits or gains of the corresponding period relating to the year of assessment 2001, then, the profits or gains of the year of assessment 2001 shall be taken to be 74 per cent of the profits or gains of that corresponding period and the assessment shall be amended accordingly.
Amendments
Subs (3D) inserted by Finance Act 2001 section 77(2) and Schedule 2 para 2.
When should I revise 2001 profits?
(3D) If the profits for 2002 are revised to actual, and as a result the profits for the short tax year 2001 are less than 74% of the profits for the corresponding year (ending in 2000), then the profits for 2001 must be revised to 74% of the profits ...
(3E) For the purposes of subsection (3D), where, apart from this subsection, a period (in this subsection referred to as the "relevant period") would not be treated as the corresponding period relating to the year of assessment 2001 by virtue of the fact that the relevant period ends on a date falling in the period from 1 January 2001 to 5 April 2001, the relevant period shall, notwithstanding any other provision of the Income Tax Acts, be treated as the corresponding period relating to that year of assessment.
Amendments
Subs (3E) inserted by Finance Act 2001 section 77(2) and Schedule 2 para 2.
Can the basis period for 2001 end between 1 January 2001 and 5 April 2001?
(3E) Although your basis period for the short tax year 2001 cannot end in the period 1 January 2001 to 5 April 2001, it can end between those dates for the purpose of adjusting profits for the short tax year 2001 in accordance with (3D).
(3F) Notwithstanding subsection (3), where the profits or gains of the year of assessment 2002 have been taken to be the full amount of the profits or gains of that year of assessment in accordance with subsection (2)(c), and the full amount of the profits or gains of the year of assessment 2001 exceed the profits or gains charged to income tax for that year of assessment, then, the profits or gains of the year of assessment 2001 shall be taken to be the full amount of the profits or gains of that year of assessment and the assessment shall be amended accordingly.
Amendments
Subs (3F) inserted by Finance Act 2001 section 77(2) and Schedule 2 para 2.
In what other circumstance should I revise 2001 profits?
(3F) If your 2002 profits are based on actual because no accounts period ended in the year (see (2)(c)), and the actual profits for the short tax year 2001 exceeded the assessed profits for that year, then the assessment for 2001 must be revised to a...
(4) In the case of the death of a person who, if he or she had not died, would under this section have become chargeable to income tax for any year of assessment, the tax which would have been so chargeable shall be assessed and charged on such person's executors or administrators, and shall be a debt due from and payable out of such person's estate.
If I die, who pays the tax resulting from revising profits to actual?
(4) If you die, any tax undercharge arising from your commencement to trade, that would otherwise have been charged on you, is assessed on the executors or administrators of your estate. Such tax is a debt due and payable from your estate.
