Income Tax (Trading and Other Income) Act 2005

250 Receipts relating to post-cessation expenditure U.K.

(1) This section applies if a person who has permanently ceased to carry on a trade makes a payment in circumstances where relief is available under [F1 section 96 of ITA 2007](relief for post-cessation expenditure).

(2) The following sums are treated as post-cessation receipts—

(a) in the case of a payment within [F2 section 97(2) or (3) of ITA 2007](payment to remedy defective work etc. or to defray expenses of a claim), the proceeds of insurance, or other sum received, for the purpose of enabling the payment to be made or by means of which it is reimbursed,

(b) in the case of a payment within [F3 section 97(4) of ITA 2007](payment to insure against claims for defective work etc.), a refund of the premium, or other sum received, in connection with the insurance, and

(c) in the case of a payment within [F4 section 97(5) of ITA 2007](payment for the purpose of collecting a debt), any sum received towards the cost of collecting the debt.

(3) If a sum mentioned in subsection (2) is received in a tax year earlier than the tax year in which the related payment is made, it is treated as having been received in the later tax year (and not the earlier tax year).

(4) Any adjustment required to give effect to subsection (3) is to be made by way of—

(a) amendment of an assessment, or

(b) discharge or repayment of tax.

Textual Amendments

F1 Words in s. 250(1) substituted (6.4.2007 with effect as noted in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 504(2) (with transitional provisions and savings in Sch. 2)

F2 Words in s. 250(2)(a) substituted (6.4.2007 with effect as noted in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 504(3)(a) (with transitional provisions and savings in Sch. 2)

F3 Words in s. 250(2)(b) substituted (6.4.2007 with effect as noted in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 504(3)(b) (with transitional provisions and savings in Sch. 2)

F4 Words in s. 250(2)(c) substituted (6.4.2007 with effect as noted in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 504(3)(c) (with transitional provisions and savings in Sch. 2)