Income and Corporation Taxes Act 1988

103 Receipts after discontinuance: earnings basis charge and related charge affecting conventional basis. U.K.

M1 (1) Where any trade, profession or vocation [F1 carried on wholly or partly in the United Kingdom] the [F2 profits] of which are chargeable to tax F3 . . . has been permanently discontinued, [F4 corporation tax shall be charged under Case VI of Schedule D] in respect of any sums to which this section applies which are received after the discontinuance.

(2) Subject to subsection (3) below, this section applies to the following sums arising from the carrying on of the trade, profession or vocation during any period before the discontinuance (not being sums otherwise chargeable to tax)—

(a) where the [F2 profits] for that period were computed by reference to earnings, all such sums in so far as their value was not brought into account in computing the [F2 profits] for any period before the discontinuance, and

(b) where those [F2 profits] were computed on a conventional basis (that is to say, were computed otherwise than by reference to earnings), any sums which, if those [F2 profits] had been computed by reference to earnings, would not have been brought into the computation for any period before the discontinuance because the date on which they became due, or the date on which the amount due in respect thereof was ascertained, fell after the discontinuance.

(3) This section does not apply to any of the following sums—

(a) sums received by a [F5 company] beneficially entitled thereto [F6 which] is not resident in the United Kingdom, or by a person acting on [F7 its] behalf, which represent income arising directly or indirectly from a country or territory outside the United Kingdom, or

(b) F8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F9 (bb) F8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(c) sums realised by the transfer of trading stock belonging to a trade at the discontinuance of the trade, or by the transfer of the work of a profession or vocation in progress at its discontinuance.

F10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) Where—

(a) in computing for tax purposes the [F2 profits] of a trade, profession or vocation a deduction has been allowed for any debt incurred for the purposes of the trade, profession or vocation, and

(b) the whole or any part of that debt is thereafter released [F11 otherwise than as part of a [F12 statutory insolvency arrangement]], and

(c) the trade, profession or vocation has been permanently discontinued at or after the end of the period for which the deduction was allowed and before the release was effected,

subsections (1) to (3) above shall apply as if the amount released were a sum received after the discontinuance.

[F13 (4A) F14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(5) For the purposes of this section the value of any sum received in payment of a debt shall be treated as not brought into account in the computation of the [F2 profits] of a trade, profession or vocation to the extent that [F15 a deduction has been made for tax purposes in respect of an impairment loss or a release of liability].

Textual Amendments

F1 Words in s. 103(1) inserted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(2)(a) (with Sch. 2)

F2 Words in s. 103(1)(2)(a)(b)(4)(a)(5) substituted (31.7.1998) by Finance Act 1998 (c. 36), s. 46(3)(a)(b), Sch. 7 para. 1

F3 Words in s. 103(1) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(2)(b), Sch. 3 (with Sch. 2)

F4 Words in s. 103(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(2)(c) (with Sch. 2)

F5 Word in s. 103(3)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(3)(a)(i) (with Sch. 2)

F6 Word in s. 103(3)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(3)(a)(ii) (with Sch. 2)

F7 Word in s. 103(3)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(3)(a)(iii) (with Sch. 2)

F8 S. 103(3)(b)(bb) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(3)(b), Sch. 3 (with Sch. 2)

F9 Sch.7 para.36(3) Copyright Designs and Patents Act 1988 (c.48)in force on 1August 1989. (Commencement order—S.I. 1989 No.816—not reproduced).

F10 Words in s. 103(3) repealed (6.4.2005 with effect in accordance with s. 883(1) of the repealing Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 82(3)(c), Sch. 3 (with Sch. 2)

F11 Words in s. 103(4)(b) inserted (with effect in accordance with s. 144(7) of the amending Act) by Finance Act 1994 (c. 9), s. 144(3)(b)

F12 Words in s. 103(4)(b) substituted (with effect in accordance with s. 80(3)(4) of the amending Act) by Finance Act 2005 (c. 7), Sch. 4 para. 5(2)

F13 S. 103(4A) inserted (3.5.1994) by Finance Act 1994 (c. 9), s. 144(5)

F14 S. 103(4A) repealed (with effect in accordance with s. 80(3)(4) of the repealing Act) by Finance Act 2005 (c. 7), Sch. 4 para. 5(3), Sch. 11 Pt. 2(5), Note

F15 Words in s. 103(5) substituted (with effect in accordance with s. 80(3)(4) of the amending Act) by Finance Act 2005 (c. 7), Sch. 4 para. 5(5)

Marginal Citations

M1 Source—1970 s.143; 1983 s.27(b)