BIM80505 - Post-cessation receipts: charging sections in general
ICTA88/S103, ICTA88/S106, ICTA88/S107 and ICTA88/S110 (2), impose a charge to tax under Case VI on certain receipts coming in after a trade, profession or vocation is discontinued (or treated for tax purposes as discontinued) where-
- the taxpayer was assessed on the ’earnings basis' and the
receipts were not brought into account for tax purposes during the
life of the business.
- the taxpayer was assessed on a conventional basis (that is, a
basis other than earnings), and
i) the receipts became due (or the amount thereof was ascertained) after discontinuance, and
ii) such receipts would not have been brought into account even if the `earnings basis' had applied.
ICTA88/S110 (3) defines the ’earnings basis' as one in which all credits (including, for example, the value of work in progress) and liabilities accruing during any period as a consequence of the carrying on of the business are brought into account in computing the profits or gains of that period for tax purposes. ICTA88/S103 (4) (5) provide for the taxation under ICTA88/S103 of post- cessation recoveries of bad and doubtful debts for which an allowance had been given under ICTA88/S74 (1)(j) (see BIM42735).
