188ÌåÓý

The date on which a business ‘permanently ceases to carry on a trade� (S202 Income (Trading and Other Income) Act 2005) is normally the date on which it ‘closes its doors� in circumstances which turn out to be permanent.  This is so even if at that time the proprietors intended or hoped to continue trading, but that expectation was not fulfilled (Marriott v Lane (1996) 69 TC 157 - although this was a Capital Gains Tax case, it should also be applied for income tax purposes).

However, if activity is recommenced, and the question is whether the new business is a continuation of the old, evidence of the proprietor’s intention will be relevant (BIM80580).

A mere decision to wind down or dispose of the business does not of itself amount to a permanent discontinuance if trading activity in fact continues after the decision (J & R O’Kane & Co v CIR (1922) 12 TC 303).