Section 227 | Application of Chapter

(1)This Chapter applies if—

(a)a person carrying on a trade changes, from one period of account to the next, the basis on which profits of the trade are calculated for income tax purposes,

(b)the old basis accorded with the law or practice applicable in relation to the period of account before the change, and

(c)the new basis accords with the law and practice applicable in relation to the period of account after the change,

but does not apply to income which is charged in accordance with section 832 (relevant foreign income charged on the remittance basis).

(2)The practice applicable in any case means the accepted practice in cases of that description as to how profits of a trade should be calculated for income tax purposes.

(3)A person changes the basis on which profits of a trade are calculated for income tax purposes if the person makes—

(a)a change of accounting policy (see subsection (4)), or

(b)a change in the tax adjustments applied (see subsections (5) and (6)).

(4)A “change of accounting policy” includes, in particular—

(a)a change from using UK generally accepted accounting practice to using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards, and

(b)a change from using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards to using UK generally accepted accounting practice.

(5)A “tax adjustment” means any adjustment required or authorised by law in calculating profits of a trade for income tax purposes.

(6)A “change in the tax adjustments applied”—

(a)does not include a change made in order to comply with amending legislation not applicable to the previous period of account, but

(b)includes a change resulting from a change of view as to what is required or authorised by law or as to whether any adjustment is so required or authorised.