477APersons leaving cash basis

1

This section applies if—

a

a person carrying on a trade leaves the cash basis in a chargeable period,

b

the person has incurred expenditure at a time when an election under section 25A of ITTOIA 2005 (cash basis for trades) has effect in relation to the trade,

c

some or all of the expenditure was brought into account in calculating the profits of the trade on the cash basis, and

d

the expenditure would have been qualifying trade expenditure if an election under section 25A of that Act had not had effect at the time the expenditure was incurred.

2

In this section the “relieved portion” of the expenditure is the amount of that expenditure for which a deduction was allowed in calculating the profits of the trade.

3

For the purposes of determining the person's available qualifying expenditure in the pool for the trade for the chargeable period (see section 470)—

a

the whole of the expenditure must be allocated to the pool for the trade in that chargeable period, and

b

the available qualifying expenditure in that pool is reduced by the relieved portion of that expenditure.

4

For the purposes of determining any disposal receipts (see section 476), the expenditure incurred by the person is to be regarded as qualifying trade expenditure.

5

For the purposes of this section a person carrying on a trade leaves the cash basis in a chargeable period if—

a

immediately before the beginning of the chargeable period an election under section 25A of ITTOIA 2005 had effect in relation to the trade, and

b

such an election does not have effect in relation to the trade for the chargeable period.