Section 240C | Unrelieved qualifying expenditure: Parts 2, 7 and 8 of CAA 2001 ^F1

(1)This section applies if—

(a)a person carrying on a trade enters the cash basis for a tax year (“the current tax year”), and

(b)at the end of ... the previous tax year, the person has unrelieved qualifying expenditure relating to the trade to carry forward from the chargeable period ending in that tax year.^F2F3F4

(2)But this section does not apply if section 240D (assets not fully paid for) applies.

(3)In calculating the profits of the trade for the current tax year, a deduction is allowed for any cash basis deductible amount of the expenditure.^F5

(4)A “cash basis deductible amount” of the expenditure means any amount of the expenditure for which a deduction would be allowed in calculating the profits of the trade on the cash basis on the assumption that the expenditure was paid in the current tax year.^F6

(5)Any cash basis deductible amount of the expenditure is to be determined on such basis as is just and reasonable in all the circumstances.^F7

(5A)For the purposes of subsection (1)(b), in determining the unrelieved qualifying expenditure the person has to carry forward, disregard sections 59(4), 461A(1) and 475A(1) of CAA 2001 (which provide that an amount is not to be carried forward as unrelieved qualifying expenditure when a person enters the cash basis).^F8

(6)In this section “unrelieved qualifying expenditure” means unrelieved qualifying expenditure for the purposes of—^F9

(a)Part 2 of CAA 2001 (see section 59(1) and (2) of that Act),^F9

(b)Part 7 of that Act (see section 461 of that Act), or^F9

(c)Part 8 of that Act (see section 475 of that Act).^F9