BIM80510 - Post-cessation receipts: receipts chargeable: ICTA88/S103
Profits computed on earnings basis
The principal effect of ICTA88/S103 has been to make obsolete
the cases of Purchase v Stainer's Executors [1951] 32TC367, and
Carson v Cheyney's Executor [1958] 38TC240, and thereby to bring
into charge sums of a royalty nature - or otherwise dependent on
results - which arise after a literary or artistic profession (for
example, author, composer, dramatist, actor or producer) or the
business of a company of, for example, film producers, has been
discontinued, whether by death or otherwise (see also, in this
connection,
BIM50700 onwards).
Other examples of receipts chargeable under ICTA88/S103
are:
- amounts released to a builder in respect of collateral building
society deposits (see
BIM51520),
- commission from orders secured by a manufacturer's agent
arising after the discontinuance of the trade,
- recovery of a bad debt where bad debt relief had been given in
the pre-cessation period.
It should be borne in mind that the continuance of receipts of
the kind described above may, in some cases, mean that the trade
etc is being continued. Thus, the profession of an author is not
necessarily discontinued when he ceases to write professionally
(unless as a consequence of his death).
As regards the transfer of the right to receive a sum which
is chargeable under ICTA88/S103, see
BIM80530.
