Part 2Trading income

C1Chapter 18Post-cessation receipts

Annotations:
Modifications etc. (not altering text)
C1

Pt. 2 Ch. 18 applied (with modifications) (22.7.2020) by Finance Act 2020 (c. 14), Sch. 16 para. 2(3)(a)

Meaning of “post-cessation receipts”

246Basic meaning of “post-cessation receipt”

1

In this Part “post-cessation receipt” means a sum—

a

which is received after a person permanently ceases to carry on a trade, and

b

which arises from the carrying on of the trade before the cessation.

2

For this purpose the reference to a person permanently ceasing to carry on a trade includes F1a reference to a company ceasing to be within the charge to corporation tax in respect of a trade.

F22A

If, immediately before a person permanently ceases to carry on a trade, an election under section 25A (cash basis for small businesses) has effect in relation to the trade, a sum is to be treated as a post-cessation receipt only if it would have been brought into account in calculating the profits of the trade on the cash basis had it been received at that time.

3

Subsection (4) applies if—

a

a firm carries on a trade,

b

a person ceases to be a partner in the firm, and

c

the departure results in the partner permanently ceasing to carry on the notional trade (see section 852).

4

The partner is treated for the purposes of this Chapter as permanently ceasing to carry on the trade.