BIM80735 - Post-cessation receipts and expenses: relief available under ICTA88/S109A: reimbursement of qualifying expenditure
Under ICTA88/S109A (3) any sums received by way of reimbursement
or refund are brought into charge as a post-cessation receipt under
ICTA88/S103 (see
BIM80501 onwards). This is to ensure
that post-cessation expenses are only relieved to the extent that
they are ultimately borne by the taxpayer.
The charge applies where a payment is made for which the new
relief is available and a sum is received:
- as the proceeds of insurance or otherwise, to allow a payment
within Section 109A (2)(a) or (b) to be made or permit it to be
reimbursed;
- by way of refund of a premium or otherwise in connection with
the insurance on which a payment qualifying under Section 109A has
been made;
- to meet debt collection costs relieved under Section 109A
(2)(d).
ICTA88/S109A (4)
Similarly, if any sums are recovered in respect of bad debts
qualifying for the new relief, they are brought into charge under
ICTA88/S103 as post-cessation receipts (see BIM80501 - BIM80510).
If a reimbursement or refund as described above is received
in a year before the year in which the related payment is made, the
charge on the receipt is made in the year in which the payment is
relieved.
If the reimbursement or refund is received after the period
for which relief for the qualifying expenditure was given, the
charge under Section 103 arises in the period in which the
reimbursement is received.
Where a sum is treated as a post-cessation receipt in any of
the above circumstances post- cessation expenses cannot be set
against it under Section 105. Without this restriction it would be
possible to obtain, in effect, relief against general income and
gains for post- cessation expenses which did not qualify under
Section 109A.
