Part 2

Trading income
Chapter 6

Trade profits: receipts

Debts released

Debts incurred and later released
97
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 person 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 on the date of the release.