Part 4Loss relief
Chapter 2Trade losses
Post-cessation trade relief
C198Meaning of “qualifying event” etc
1
This section explains for the purposes of section 96 what is meant by—
a
a “qualifying event” occurring in relation to a debt owed to a person who has permanently ceased to carry on a trade, and
b
“the appropriate amount of the debt” to be deducted in calculating a person's net income for “the relevant tax year”.
2
A qualifying event occurs in relation to a debt owed to the person if—
a
an unpaid debt was brought into account in calculating the profits of the trade,
b
the person is entitled to the benefit of the debt, and
c
the debt is released (in whole or in part) as part of a statutory insolvency arrangement (within the meaning of Part 2 of ITTOIA 2005).
The event occurs when the debt is released.
3
The appropriate amount of the debt to be deducted is—
a
the amount released, or
b
if the person was entitled to only part of the benefit of the debt, the corresponding part of the amount released.
4
The relevant tax year is the tax year in which the debt is released.
5
A qualifying event also occurs in relation to a debt owed to the person if—
a
an unpaid debt was brought into account in calculating the profits of the trade,
b
the person is entitled to the benefit of the debt, and
c
the debt proves to be bad.
The event occurs when the debt proves to be bad.
6
The appropriate amount of the debt to be deducted is—
a
the amount of the debt, or
b
if the person was entitled to only part of the benefit of the debt, the corresponding part of the amount of the debt.
7
The relevant tax year is the tax year specified in the claim.
8
The person making the claim may specify—
a
the tax year in which the debt proves to be bad, or
b
a subsequent tax year throughout which the debt remains bad (so long as the tax year begins within 7 years of the cessation),
but, if the person has previously made a claim specifying a tax year in respect of the debt, the person may not specify another tax year in respect of it.