SCHEDULES

SCHEDULE 22U.K. Prevention of exploitation of [F1SCHEDULE 2 TO ITTOIA 2005 (SO FAR AS RELATING TO OVERLAP PROFIT) ]

Part IU.K. Cases I and II of Schedule D

Increase of profits or gains of transitional overlap periodU.K.

3(1)This paragraph applies where, in the case of a trade, profession or vocation carried on by any person—U.K.

(a)[F2paragraph 52 of Schedule 2 to the Income Tax (Trading and Other Income) Act 2005 (“ITTOIA 2005”)] applies; and

(b)any amount which is included in the transitional overlap profit would not have been so included if—

(i)any relevant change made by that person had not been made; or

(ii)any relevant transaction entered into by that person had not been entered into.

(2)Subject to sub-paragraph (3) below, [F3paragraph 52 of that Schedule] shall have effect as if the reference to the transitional overlap profit were a reference to the amount (if any) by which that profit exceeds 1.25 times the aggregate of the amounts falling within sub-paragraph (1)(b) above.

(3)Sub-paragraph (3) of paragraph 1 above shall apply for the purposes of this paragraph as it applies for the purposes of that paragraph but subject to the following modifications, namely—

(a)the reference to the aggregate of the amounts mentioned in the said paragraph 2(2) shall have effect as a reference to the transitional overlap profit; and

(b)the reference to the appropriate percentage of the turnover for the transitional period shall have effect as a reference to the appropriate percentage of the turnover for the transitional overlap period.

(4)In this paragraph—

• “the appropriate percentage” means the following expressed as a percentage, that is, 365 divided by the number of days in the transitional overlap period;

• “the transitional overlap period” means the period beginning immediately after the end of—

  (a)

  the basis period for the year 1996-97 [F4(determined in accordance with paragraph 1 of Schedule 20 to the Finance Act 1994 despite the repeal by ITTOIA 2005 of that paragraph)]; or

  (b)

  in the case of a trade or profession carried on by any person in partnership with other persons, the basis period of the partnership for that year [F4(as so determined)],

  and (in either case) ending with 5th April 1997;

• “the transitional overlap profit” means the amount mentioned in [F5paragraph 52(2) of Schedule 2 to ITTOIA 2005].