Part 2Trading income
Chapter 6Trade profits: receipts
Debts released
97Debts incurred and later released
(1)
This section applies if—
(a)
in calculating the profits of a trade, a deduction is allowed for the expense giving rise to a debt owed by the person carrying on the trade,
(b)
all or part of the debt is released, and
(c)
the release is not part of a statutory insolvency arrangement.
(2)
The amount released—
(a)
is brought into account as a receipt in calculating the profits of the trade, and
(b)
is treated as arising on the date of the release.