BIM80535 - Post-cessation receipts: deductions for expenses: ICTA88/S105
Where a trade etc has been discontinued, ICTA88/S105 (1) and (3) provide for the deduction, in arriving at the liability on post-cessation receipts, of losses, expenses and debits, not arising from the discontinuance itself, which would have been allowable had the business continued. They also provide for the allowance of any unrelieved losses and unused capital allowances of the discontinued business. If there is liability both under ICTA88/S103 and S104, the expenses and debits are to be allocated in such a manner as may be just. The allocation of unrelieved losses and unused capital allowances of the discontinued business is, however, to be made as follows:
- Where more than one year of assessment is involved, to an
earlier year in priority to a later year.
- Subject to (a), against sums chargeable under ICTA88/S104 (1) -
(3) in priority to sums chargeable under ICTA88/S103.
In the case of a change of accounting basis before 5 April 1999, a deduction can be made against the receipts chargeable under ICTA88/S104 (4), (5) for any expenses or debits not otherwise allowed, which would have been deductible but for the change. There is, however, no special allowance for unrelieved losses or capital allowances. These remain available for carry-forward in the normal way against the Case I or II assessments, or for relief under Sections 380 and 382 etc against the taxpayer's income of which the Case VI assessment under ICTA88/S104 (4), (5) will form part.
