Capital Allowances Act 2001

[F1 477A Persons leaving cash basis U.K.

(1) This section applies if—

(a) a person carrying on a trade leaves the cash basis in a chargeable period,

(b) the person has incurred expenditure at a time when [F2 the cash basis applies] in relation to the trade,

(c) some or all of the expenditure was brought into account in calculating the profits of the trade on the cash basis, and

(d) the expenditure would have been qualifying trade expenditure if [F3 the cash basis had not applied] at the time the expenditure was incurred.

(2) In this section the “relieved portion” of the expenditure is the amount of that expenditure for which a deduction was allowed in calculating the profits of the trade.

(3) For the purposes of determining the person's available qualifying expenditure in the pool for the trade for the chargeable period (see section 470)—

(a) the whole of the expenditure must be allocated to the pool for the trade in that chargeable period, and

(b) the available qualifying expenditure in that pool is reduced by the relieved portion of that expenditure.

(4) For the purposes of determining any disposal receipts (see section 476), the expenditure incurred by the person is to be regarded as qualifying trade expenditure.

(5) For the purposes of this section a person carrying on a trade leaves the cash basis in a chargeable period if—

(a) immediately before the beginning of the chargeable period [F4 the cash basis applied] in relation to the trade, and

(b) [F5 the cash basis does not apply] in relation to the trade for the chargeable period.

[F6 (5A) Subsection (11)(za) of section 1A (capital allowances and charges: cash basis) applies for the purposes of this section as it applies for the purposes of that section.]]

Textual Amendments

F1 S. 477A inserted (with effect in accordance with Sch. 2 para. 64 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 2 para. 59

F2 Words in s. 477A(1)(b) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 44(2)(a), 47 (with Sch. 10 paras. 48-50)

F3 Words in s. 477A(1)(d) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 44(2)(b), 47 (with Sch. 10 paras. 48-50)

F4 Words in s. 477A(5)(a) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 44(3)(a), 47 (with Sch. 10 paras. 48-50)

F5 Words in s. 477A(5)(b) substituted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 44(3)(b), 47 (with Sch. 10 paras. 48-50)

F6 S. 477A(5A) inserted (for the tax year 2024-25 and subsequent tax years) by Finance Act 2024 (c. 3), Sch. 10 paras. 44(4), 47 (with Sch. 10 paras. 48-50)