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Legislation
Income Tax Act 2007

Crossheading Post-cessation trade relief

  • Section 96 Post-cessation trade relief
  • Section 97 Meaning of “qualifying payment”
  • Section 98 Meaning of “qualifying event” etc
  • Section 98A Denial of relief for tax-generated payments or events
  • Section 99 Reduction of relief for unpaid trade expenses
  • Section 100 Prohibition against double counting
  • Section 101 Treating excess post-cessation trade relief as CGT loss
  1. Post-cessation trade relief
  2. Meaning of “qualifying payment”

Section 97 | Meaning of “qualifying payment”

From legislation.gov.uk

(1)For the purposes of section 96 a person makes a “qualifying payment” after permanently ceasing to carry on a trade if the person makes a payment wholly and exclusively for any of purposes A to D.

(2)A payment is made for purpose A if it is made—

(a)in remedying defective work done, goods supplied or services provided in the course of the trade, or

(b)by way of damages (whether awarded or agreed) in respect of defective work done, goods supplied or services provided in the course of the trade.

(3)A payment is made for purpose B if it is made in meeting the expenses of legal or other professional services in connection with a claim (a “claim about defects”) that—

(a)work done in the course of the trade was defective,

(b)goods supplied in the course of the trade were defective, or

(c)services provided in the course of the trade were defective.

(4)A payment is made for purpose C if it is made in insuring—

(a)against liabilities arising out of any claim about defects, or

(b)against the liability to meet the expenses of legal or other professional services in connection with any claim about defects.

(5)A payment is made for purpose D if it is made for the purpose of collecting a debt which was brought into account in calculating the profits of the trade.

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