Section 328 — Succession of one firm by another firm. Successor to s.188 of the 1961 Act.
Section 328 is in Chapter XVII — Special Provisions Relating to Certain Persons, which runs from section 302 to section 355.
Where a firm carrying on a business or profession is succeeded by another firm, and the case is not one covered by section 327, the section requires separate assessments to be made on the predecessor firm and on the successor firm, in accordance with section 313. It fixes only the fact of separate assessment and the route by which those assessments are made; the manner of apportioning income between the two periods comes from section 313.
Succession by another firm would otherwise leave it unclear whether one assessment or two should follow; the section settles that the two firms are assessed separately, and keeps section 327 cases out of that rule.
On a succession of one firm by another that is outside section 327, expect two assessments rather than one, each made as provided in section 313, and file on that basis for the predecessor and the successor separately. The section itself says nothing about how income is split or who bears the tax — that is worked out under section 313.
A firm carrying on a consultancy practice is dissolved in October and the practice is taken over by an entirely new firm of different partners. Because this is a succession by another firm and not a change in constitution covered by section 327, the section requires two assessments — one on the predecessor firm for the period up to the succession and one on the successor for the rest — made as section 313 provides. Had two partners merely retired and the same firm carried on, section 327 would have applied instead and there would have been a single assessment. What the section does not settle is how income is split between the two periods; that comes from section 313.
In the two returns filed for the split periods and the two assessment orders that follow a succession — one on the predecessor firm, one on the successor. The apportionment argued about in those assessments is governed by section 313; this section only settles that there are two assessments and not one.
separate assessments shall be made on the predecessor firm and the successor firm as per the provisions of section 313
See the full 1961 to 2025 concordance.