Section 1261 | Accounting periods of firms

(1)In this Part references to an accounting period of a firm which carries on a trade are to a period that would be an accounting period of the firm if the firm were a company.

(2)For the purposes of subsection (1) it is to be assumed that the company by reference to which the accounting periods of the firm are determined (“the deemed company”)—

(a)is UK resident,

(b)acquires a source of income on the occurrence of an event that falls within subsection (3),

(c)ceases to trade on the occurrence of an event that falls within subsection (4), and

(d)ceases to trade, and immediately afterwards starts to trade, on the occurrence of a change in the persons carrying on the trade falling within subsection (5).

Paragraph (a) is subject to subsection (6).

(3)An event falls within this subsection if—

(a)immediately before the event no company carries on the trade in partnership, and

(b)immediately after the event the trade is carried on in partnership by persons who include a company.

(4)An event falls within this subsection if—

(a)immediately before the event the trade is carried on in partnership by persons who include a company, and

(b)immediately after the event no company carries on the trade in partnership.

(5)A change in the persons carrying on the trade falls within this subsection if—

(a)both immediately before and immediately after the change the trade is carried on in partnership by persons who include a company, but

(b)no company which carried on the trade immediately before the change continues to carry it on after the change.

(6)For the purpose of determining, in relation to a partner, the accounting periods by reference to which profits are to be calculated under section 1259, the residence of the deemed company at any time is to be taken to be the same as the partner's.