Income Tax (Trading and Other Income) Act 2005 Explanatory Notes

Income Tax (Trading and Other Income) Act 2005

2005 CHAPTER 5

Commentary on Sections

Part 2: Trading income

Chapter 6: Trade Profits: Receipts
Section 97: Debts incurred and later released

396.If an amount owed by a trader is released, this section treats the amount released as a trading receipt. The section is based on section 94 of ICTA.

397.Subsection (1)(c) sets out the exception that applies if the debt is released as part of a “statutory insolvency arrangement” (defined in section 259 of this Act). This rule reflects the change to section 94 of ICTA made by section 144 of FA 1994.

398.If the trader is no longer carrying on the trade when the debt is released, the amount released is charged to tax as a post-cessation receipt (see section 249 of this Act).

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