Section 638 | Allowable deductions

(1)In calculating the amount on which corporation tax is charged under this Chapter for an accounting period, deductions are allowed in accordance with this section from the amount which would otherwise be chargeable to corporation tax under this Chapter.

(2)A deduction is allowed for the total sum of all losses, expenses and debits within subsection (3) that are incurred during or before the accounting period (but subject to subsections (4) and (5)).

(3)The losses, expenses and debits within this subsection are those which, if the company carrying on the deposit-taking trade had not permanently ceased to do so—

(a)would have been deducted in calculating the profits of the trade for corporation tax purposes, or

(b)would have been deducted from or set off against the profits of the trade for corporation tax purposes.

(4)No deduction is allowed if the loss, expense or debit arises directly or indirectly from the cessation itself.

(5)A loss, expense or debit is only within subsection (3) if incurred—

(a)after the start of the winding up proceedings or, if later, the permanent cessation of the deposit-taking trade, or

(b)in the case of a loss, at or before the permanent cessation of the deposit-taking trade.

(6)No deduction for an amount is allowed under this section if the amount has already been allowed (whether under this section or under any other provision of the Tax Acts).