Section 462A | Persons leaving cash basis ^F1

(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 the cash basis applies in relation to the trade,^F2

(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 expenditure if the cash basis had not applied at the time the expenditure was incurred.^F3

(2)In this section the “relieved portion” of the expenditure is the higher of the following—

(a)the amount of that expenditure for which a deduction was allowed in calculating the profits of the trade, or

(b)the amount of that expenditure for which a deduction would have been so allowed if the expenditure had been incurred wholly and exclusively for the purposes 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 456)—

(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 values (see section 462), the expenditure incurred by the person is to be regarded as qualifying expenditure.

(4A)Subsection (11)(za) of section 1A (capital allowances and charges: cash basis) applies for the purposes of this section as it applies for the purposes of that section.^F4

(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 the cash basis applied in relation to the trade, and^F5

(b)the cash basis does not apply in relation to the trade for the chargeable period.^F6