Corporation Tax Act 2009

Chapter 9 Post-cessation receipts

Charge to tax on post-cessation receipts

280 Charge to tax on post-cessation receipts

The charge to corporation tax on income applies to post-cessation receipts arising from a UK property business.

281 Extent of charge to tax

(1) A post-cessation receipt is chargeable to tax under this Chapter only so far as the receipt is not otherwise chargeable to corporation or income tax.

(2) Accordingly, a post-cessation receipt arising from a UK property business is not chargeable to tax under this Chapter so far as it is brought into account in calculating the profits of the business of any period.

Meaning of “post-cessation receipts”

282 Basic meaning of “post-cessation receipt”

(1) In this Chapter “post-cessation receipt” means a sum—

(a) which is received after a person permanently ceases to carry on a UK property business, and

(b) which arises from the carrying on of the business before the cessation.

(2) In this Chapter, except in section 284, references to a UK property business include one within the charge to income tax and references to a person permanently ceasing to carry on a UK property business include—

(a) in the case of a company, the occurrence of an event treated under section 362 of ITTOIA 2005 (company starting or ceasing to be within charge to income tax) as the company permanently ceasing to carry on the business, and

(b) in the case of a UK property business carried on by a person in partnership, the occurrence of an event treated under section 353(3) of ITTOIA 2005 (basic meaning of “post-cessation receipt”) as the person permanently ceasing to carry on the business.

283 Other rules about what counts as a “post-cessation receipt”

(1) Section 284 (transfer of rights if transferee does not carry on UK property business) treats certain amounts as being, or not being, post-cessation receipts for the purposes of this Chapter.

(2) The following provisions (which treat certain amounts as post-cessation receipts) apply for the purposes of this Chapter as they apply for the purposes of Chapter 15 of Part 3 (but as if any reference to a trade were to a UK property business)—

• section 82(6) (contributions to local enterprise organisations or urban regeneration companies),

• section 101(3) (distribution of assets of mutual concerns),

• section 108(3) (receipt of benefits by donor or connected person),

• section 192 (debts paid after cessation), and

• section 193 (debts released after cessation), as qualified, where appropriate, by section 56(4) (car or motor cycle hire).

(3) This Chapter also needs to be read with—

(a) section 249(3) (which treats certain amounts as not being post-cessation receipts), and

(b) section 1277 (which treats certain income as a post-cessation receipt: unremittable income).

284 Transfer of rights if transferee does not carry on UK property business

(1) This section applies if—

(a) a company (“the transferor”) permanently ceases to carry on a UK property business,

(b) the transferor transfers to another person (“the transferee”) for value the right to receive sums arising from the carrying on of any business (“the transferred business”) comprised in the transferor’s UK property business, and

(c) the transferee does not subsequently carry on the transferred business.

(2) The transferor is treated as receiving a post-cessation receipt.

(3) The amount of the receipt is—

(a) the amount or value of the consideration for the transfer, if the transfer is at arm’s length, or

(b) the value of the rights transferred as between parties at arm’s length, if the transfer is not at arm’s length.

(4) Any sums mentioned in subsection (1)(b) which are received after the cessation of the property business are not post-cessation receipts.

Deductions

285 Allowable deductions

Sections 196 and 197 apply for the purposes of this Chapter as they apply for the purposes of Chapter 15 of Part 3 (but as if any reference to a trade were to a UK property business).

Election to carry back

286 Election to carry back

Sections 198 to 200 apply for the purposes of this Chapter as they apply for the purposes of Chapter 15 of Part 3 (but as if any reference to a trade were to a UK property business).