PART IV PROVISIONS RELATING TO THE SCHEDULE D CHARGE
C1CHAPTER V COMPUTATIONAL PROVISIONS
Deductions
F189Debts proving to be irrecoverable after discontinuance etc
1
This section applies if—
a
section 337(1) applies to treat a trade as discontinued by reason of any event, or
b
a person permanently ceases to carry on a trade or profession,
and a company carries on the trade or profession after that event or cessation.
2
In computing for corporation tax purposes the profits of the trade or profession in any period after the event or cessation, there may be deducted a sum equal to any amount proved during that period to be irrecoverable in respect of any debts—
a
which were credited in computing for tax purposes the profits for any period before the event or cessation, and
b
in respect of which the benefit was assigned to the company carrying on the trade or profession after the event or cessation.
3
Subsection (2) applies only so far as the total amount proved to be irrecoverable in respect of the debts exceeds any F2relevant deduction in respect of them in a computation for any period before the event or cessation.
F34
In this section “debt” includes an obligation or liability that falls to be discharged otherwise than by the payment of money.
The references to a debt being irrecoverable shall be read accordingly.
5
For the purposes of this section “relevant deduction”, in relation to a debt, means a deduction made for tax purposes in respect of an impairment loss or release.
See—1979(C) s.122—election to take capital gain or loss into account when asset appropriated to stock in trade.1989 ss.67-74—employee share ownership trusts.Banking Act 1987 (c.22) s.66—contributions to the Deposit Protection Fund.