PM163190 - Trading profits: overlap

There will almost certainly be some overlap between the basis periods of a partner’s notional trade in two successive years. This will happen between the second and third years following commencement or during the period of realignment following a change of accounting date. It will only not occur if an accounting date of 5 April is used consistently throughout the life of the business. The effect of there being ‘overlap’ is that the profits arising in the period of overlap will be assessed in more than one tax year. Guidance on how this is determined and the circumstances in which relief can be given can be found at BIM81075 onwards.