[F147BDisposals made by persons after leaving cash basisU.K.
(1)This section applies where—
(a)a person disposes of, or of an interest in, an asset that has been used for the purposes of a trade, profession or vocation carried on by the person, and
(b)conditions A and B are met in relation to the trade, profession or vocation.
(2)Condition A is that—
(a)any expenditure attributable to the asset or interest under paragraph (a) or (b) of section 38(1) was incurred at a time when an election under section 25A of ITTOIA 2005 (cash basis for small businesses) had effect in relation to the trade, profession or vocation, and
(b)that expenditure (“the relevant expenditure”) has been brought into account in calculating the profits of the trade, profession or vocation on the cash basis.
(3)Condition B is that no such election has effect in relation to the trade, profession or vocation at the time of the disposal.
(4)Section 39 (exclusion of expenditure by reference to tax on income) does not apply in relation to the relevant expenditure.
(5)Section 41 (restriction of losses by reference to capital allowances and renewals allowances) has effect as if—
(a)the election mentioned in subsection (2)(a) above had not had effect at the time the relevant expenditure was incurred, and
(b)the reference in subsection (7) to qualifying expenditure included a reference to expenditure which, if that election had not had effect at that time, would have been qualifying expenditure.
(6)Section 45 (exemption for certain wasting assets) and section 47 (wasting assets qualifying for capital allowances) have effect as if the election mentioned in subsection (2)(a) above had not had effect at the time the relevant expenditure was incurred.
Accordingly, any reference in those sections to expenditure qualifying for capital allowances is to be read as a reference to expenditure that would, in the absence of the election, have qualified for such allowances.]
Textual Amendments
F1Ss. 47A, 47B and cross-heading inserted (with effect in accordance with Sch. 4 paras. 56, 57 of the amending Act) by Finance Act 2013 (c. 29), Sch. 4 para. 45