Section 94 | Debts incurred and later released

(1)This section applies if—

(a)in calculating the profits of a trade, a deduction is allowed for the expense giving rise to a debt owed by the company carrying on the trade,

(b)all or part of the debt is released, and

(c)the release is not part of a statutory insolvency arrangement.

(2)The amount released—

(a)is brought into account as a receipt in calculating the profits of the trade, and

(b)is treated as arising in the accounting period in which the release is effected.