Commentary

B2.804 Basic meaning of post-cessation receipt

Business tax
Business tax | Commentary

B2.804 Basic meaning of post-cessation receipt

Business tax | Commentary

B2.804 Basic meaning of post-cessation receipt

A post-cessation receipt is income received after a trade has been permanently discontinued1, and which arises from the carrying on of that trade before the discontinuance2.

If, immediately before a person permanently ceases to carry on a trade, a cash basis election has effect for that trade (see B2.112), a sum is only treated as taxable if it would have been brought into account in calculating the profits of the trade on a cash basis if it had been received at that time3.

A company is treated as ceasing to carry on a trade when it ceases to be within the charge to corporation tax in respect of that trade4.

Where a partner leaves a partnership and is treated as permanently discontinuing their 'notional trade' (see B7.501), any sum received after the individual ceases to be a partner may be taxable as a post-cessation receipt for income tax purposes5. If a company receives a sum arising from the carrying on of that trade by

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial