On the occasion of the commencement, cessation or sale of a
trade you need to consider if the expenses arising are incurred for
the purposes of carrying on and earning the profits of the trade or
for the purposes of the commencement, cessation or sale. You will
also in this context have to pay particular attention to the issue
of whether the expenditure is on capital account (see
BIM35000 onwards). Capital expenditure
may well satisfy ICTA88/S74 (1)(a) but, with the exception of
specific statutory reliefs such as ICTA88/S77 (see
BIM45800 onwards), is disallowed for tax
purposes.
The guidance below covers the following cases:
| BIM38310 | Costs of going out of business (CIR v Anglo Brewing Co Ltd) |
| BIM38315 | Severance payments (CIR v Cosmotron Manufacturing Ltd) |
| BIM38320 | Payment to effect orderly shut-down of trade (O’Keefe v Southport Printers Ltd) |
| BIM38330 | Cost of meeting former owner’s obligations (Cooke v Quick Shoe Repair Service) |
| BIM38340 | Compensation for loss of office at time of share sale (James Snook & Co Ltd v Blasdale) |
| BIM38350 | Compensation for cancellation of service agreements linked to share sale (Bassett Enterprise Ltd v Petty) |
| BIM38360 | Compensation for loss of office at time of take-over (CIR v Patrick Thomson Ltd) |
| BIM38370 | Cost of hiring and firing employees (Mitchell v B W Noble Co Ltd) |
| BIM38380 | Compensation to directors following dispute (George J Smith & Co Ltd v Furlong) |
| BIM38385 | (Redundancy payments on take-over (George Peters & Co Ltd v Smith) |
| BIM38390 | Payment in lieu of notice (Godden v A Wilson’s Stores (Holdings) Ltd) |
| BIM38395 | Liability for future leaving payments to employees (Owen v Southern Railway of Peru Ltd) |
