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Finance Act 1981

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Method of giving effect to relief or charge

5(1)Relief under paragraph 3 above in respect of any period of account shall be given as a deduction in charging the profits or gains of the trade to income tax for the relevant year of assessment.

(2)Subject to sub-paragraph (3) below, any deduction for capital allowances shall be made before the deduction of the relief.

(3)Where the deductions for the relevant year of assessment include deductions for relief, capital allowances or losses carried forward from an earlier year under paragraph 9 below, section 70(4) of the [1968 c. 3.] Capital Allowances Act 1968 or section 171 of the Taxes Act, the deductions shall be made in the following order—

(a)capital allowances other than those carried forward under the said section 70(4) from an earlier year ;

(b)relief under paragraph 3 above in respect of the period of account in relation to which the year is the relevant year of assessment;

(c)capital allowances carried forward as aforesaid from years of assessment not earlier than the year for which the basis period ended on or included 14th November 1980 ;

(d)relief under paragraph 3 above carried forward under paragraph 9 below, taking relief in respect of a later period of account before relief in respect of an earlier one ;

(e)capital allowances carried forward as aforesaid from years of assessment earlier than those referred to in paragraph (c) above;

(f)relief under Schedule 5 to the [1976 c. 40.] Finance Act 1976 ;

(g)losses carried forward to the year under the said section 171.

(4)Where the same year is the relevant year of assessment in relation both to—

(a)a period of account in respect of which relief falls to be allowed under this Part of this Schedule ; and

(b)a period of account in respect of which relief fell to be allowed under Schedule 5 to the [1976 c. 40.] Finance Act 1976,

the relief given effect in that year shall be attributed to the latter before the former.

(5)A charge under paragraph 4 above in respect of any period of account shall be made by means of an assessment to income tax on the profits or gains of the trade—

(a)in the case of a charge by reason of a person ceasing to carry on the trade or ceasing to be within the charge to income tax in respect of the trade, for the year of assessment in which the cessation occurs; and

(b)in the case of a charge in the circumstances mentioned in sub-paragraph (2) of that paragraph, for the relevant year of assessment.

Any such assessment shall be in addition to any other assessment falling to be made on the profits or gains of the trade for the year of assessment in question.

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