BIM80750 - Post-cessation receipts: expenses: relief available under ICTA88/S109A: interaction with other sections and reliefs
Post-cessation receipts regime
The relief exists alongside the provisions governing
post-cessation receipts and expenses described in
BIM80501 onwards. Under those provisions
a deduction is allowed (Section 105 (1), see
BIM80535) for any loss, expense or debit
which would have qualified as a trading deduction, had the business
not been discontinued, in arriving at the tax liability on post-
cessation receipts. Any excess of expenditure over receipts does
not give rise to a Case VI loss. Instead it must be carried forward
and can only be relieved against any post-cessation receipts
arising in later years.
By no means all post-cessation expenses within Section 105
(1) (see BIM80535) qualify for relief under Section 109A. In a year
where the taxpayer has post-cessation expenses some of which
qualify under Section 109A, the following order of set-off
applies:
- Post-cessation expenses qualifying only under Section 105 (1). Allow against post- cessation receipts only. Carry forward any excess to allow against any post-cessation receipts that may arise in future years.
- Post-cessation expenses qualifying under both Section 105 (1) and Section 109A. Allow first against post-cessation receipts, then against other income and gains. Carry forward any excess to allow against any post-cessation receipts that may arise in future years. If no claim under S109A is made then the expenses fall within the S105 rules and are set against post-cessation receipts and any excess is carried forward to set against any post-cessation receipts which may arise in future years.
No deduction under Section 105 (1) may be made from sums treated by Section 109A (3) and (4) as chargeable under ICTA88/S103, see BIM80735.
