BIM80725 - Post-cessation receipts: expenses: relief available under ICTA88/S109A: persons qualifying for relief

An individual taxpayer may claim relief for qualifying payments made or bad debts suffered by him/her in respect of a business he or she previously carried on:

• sole - whether or not another person succeeded to the business in partnership where the trade was not subsequently carried on by any person (but see below for the position under the current year basis introduced for self-assessment).
• in partnership where the business was continued by others but no continuation basis election ( BIM72210 onwards) was made (but see below for the position under the current year basis introduced for self-assessment).

The self-assessment provisions concerning partnerships (see FA95/S117) deem each individual partner to carry on a separate trade. Section 117 also amends ICTA88/S110 so that a deemed cessation of such a deemed trade is treated as a permanent discontinuance for the purposes of post-cessation receipts and expenditure. From 1997-98 (or from 1994-95 onwards in cases where the partnership business commenced on or after 6 April 1994), a retiring partner may claim for qualifying payments made or bad debts suffered by him/her whether or not the business continues after he/she has ceased.

The person who carried on the ceased business must be the same as the person who makes the qualifying post-cessation payment. But an executor may claim against income and gains of the estate of the person for whom he or she is acting as executor, where that person formerly carried on a business and made a qualifying post-cessation payment. Any claim by the executor will be subject to the normal time limits.