Section 211: Treating middle date as accounting date
858.This is the first of three sections that, together, prevent the complex change of accounting date rules (in sections 214 to 220) from applying in particular circumstances. They are based on the non-statutory practice described in paragraph 71175 of the Business Income Manual.
859.Some taxpayers prefer to prepare their accounts regularly to a particular day in the tax year (for example, the last Friday in September) rather than to a particular date. The chosen day can then fall on a range of (normally) seven dates. Because the chosen day will not, from year to year, fall on the same date this would trigger the change of accounting date rules every year.
860.These sections legislate the practice that enables those taxpayers to choose the middle date of the actual dates to which accounts may be prepared as the accounting date. They prevent the change of accounting date rules applying. See Change 56 in Annex 1.
861.In these sections the date which is to be taken as the accounting date is referred to as the “middle date” rather than the “mean date” (the term used in paragraph 71175 of the Business Income Manual). “Middle date” better reflects common usage and the fact that the actual accounting date does not normally vary by more than four days from that middle date. The only exception is when the day to which accounts are prepared is at or near the end of February and the day can fall on 29 February. Then the spread of dates on which the chosen day can fall is extended from seven to eight. But the “middle date” is still the fourth of those dates.
862.These sections express a rule based on a simple idea. But there are surprisingly complex implications. It is, for example, necessary:
to express concisely, yet clearly, the “four day” condition while allowing for the fact that accounts may be prepared to a particular day (such as the last Sunday in the year) or to a day in a particular week (such as the last day of a school term);
to preserve the optional nature of the practice;
to ensure that taxpayers can, if they wish, move in or out of the practice authorised by the sections without the same profits being assessed twice or dropping out of charge; and
to ensure that no profits are assessed twice or drop out of charge when the trade ends.
863.Because of this complexity the rule is set out in three sections.
864.Section 211 is the first of the three sections and sets the scene by stating the purpose of the rule and the election requirements.
865.The bracketed words in subsection (1)(b) address the case of a chosen day that can fall on 29 February.
866.Subsection (4) make elections as straightforward as possible by adopting the procedures and time limits of the Self Assessment cycle. Unlike the opt out election for the late accounting date rules (see the commentary on section 208) the election for the middle date rules is “opt in”. This is because it is less clear that taxpayers will want automatically to choose the middle date treatment than it is that they will want to choose the late accounting date treatment.
