»Ê¹ÚÌåÓýapp

Where a trader expands their business there are three possible consequences, depending on the facts.

1. »Ê¹ÚÌåÓýapp new activity represents a new trade in addition to their existing trade (BIM80530)

Factors which would affect whether there were two trades after the acquisition or one are:

• the amount of central co-ordination and control, and
• whether staff, stock and customers are common to the two businesses.

If the new activity is a separate trade then the commencement provisions (BIM81015) will apply to the new business. Each business will continue to be treated as a separate trade for tax purposes unless, as a matter of fact, they are merged to form a single trade. Where that happens, the question will be whether the combined business is a new one or not (BIM80595).

2. »Ê¹ÚÌåÓýapp new activity combined with the old represents a completely new trade (BIM80595)

In this situation the acquisition of new activities is on such a scale, or brings about such a change to the nature of the old business, that it means that the old business comes to an end. »Ê¹ÚÌåÓýapp combination of the two activities represents an entirely new trade in its own right.

»Ê¹ÚÌåÓýapp cessation provisions (BIM81025) will apply to the old business. »Ê¹ÚÌåÓýapp commencement provisions (BIM81015) will apply to all of the profits from the new business.

3. »Ê¹ÚÌåÓýapp new activity combined with the old represents a continuation of the old trade

If neither of the two previous situations applies then the acquisition of the new activities has no effect on the basis of assessment. »Ê¹ÚÌåÓýapp owner is simply carrying on the same trade as before, but on a larger scale.

If the expansion involves the acquisition of another business as a going concern then the question of succession may arise (BIM80620).