Certain limited deductions are allowed in calculating the amount charged to tax as a post-cessation receipt (ITTOIA 2005, s. 254). More specifically, a deduction is allowed for any ‘loss, expense or debit’ which would have been allowable in calculating profits for income or corporation tax purposes before discontinuance, or would have been deducted from or set off against such profits.

From 2013–14, where a business elected to use the cash basis under ITTOIA 2005, s. 25A, post-cessation receipts and expenses are treated as though the business was still in the cash basis (ITTOIA 2005, s. 254(2A)).

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