Part 2Trading income

Chapter 18Post-cessation receipts

Sums treated as post-cessation receipts

248Debts paid after cessation

(1)

Subsection (2) applies if, in calculating the profits of a trade for income or corporation tax purposes, a deduction is made in respect of a debt under—

(a)

section 35 (bad and doubtful debts), or

(b)

section 74(1)(j) of ICTA (corresponding corporation tax provision),

and a person permanently ceases to carry on the trade.

(2)

A sum received after the cessation is treated as a post-cessation receipt so far as the deduction is made.

(3)

Subsection (4) applies if relief is given under F1section 96 of ITA 2007(relief for post-cessation expenditure) F2as a result of subsection (1)(b) of that section in respect of a debt owed to a person who has permanently ceased to carry on a trade.

(4)

A sum received by the person in payment of the debt is treated as a post-cessation receipt so far as relief is given in respect of the sum.