The logic for making the restriction to cumulative
accountancy rental excess (see
BLM74005) is that where rentals are
effectively taken out of charge to tax by a bad debt deduction
those rentals should not trigger a further subsequent deduction.
This applies equally to cumulative normal rental excess.
FA97/Sch12/Para10 therefore provides a set of rules to restrict
that type of excess for bad debt deduction which are a mirror image
of those in Paragraph 9.
In practice, however, it is only necessary to consider those
rules in the exceptional case where relief for cumulative normal
rental excess is available, bad debts arise in respect of lease
rentals and the situation is one of those described in
BLM74040 where a restriction has a
practical effect.
If problems arise in applying the rules in Paragraph 10 to
such a case, you should seek advice from CT & VAT
(Technical).
