Taxes Consolidation Act 1997 section 66

Special basis at commencement of trade or profession

Section 66 sets out the special rules for computing taxable profits in the opening years of a new trade or profession, commonly known as the commencement rules.

• In the first year of trading, the tax assessment is based on the actual profits from the date of commencement to the following 31 December.
• In the second year, the basis of assessment depends on the number and length of accounting periods ending in that year — it may be the profits of a 12-month accounting period, the last 12 months to the latest accounting date, or the actual calendar year profits.
• In the third year, normal assessment rules apply, but the taxpayer may elect to reduce the assessment by any excess of the second year's assessed profits over the actual profits of that second year, with any unrelieved balance carried forward as a trading loss.
• Transitional provisions applied for the years of assessment 2001 to 2003 to ensure the commencement rules operated correctly during the changeover from the old tax year (6 April to 5 April) to the calendar year basis effective from 1 January 2002.

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