Part 4Loss relief

Chapter 2Trade losses

Post-cessation trade relief

97Meaning of “qualifying payment”

1

For the purposes of section 96 a person makes a “qualifying payment” after permanently ceasing to carry on a trade if the person makes a payment wholly and exclusively for any of purposes A to D.

2

A payment is made for purpose A if it is made—

a

in remedying defective work done, goods supplied or services provided in the course of the trade, or

b

by way of damages (whether awarded or agreed) in respect of defective work done, goods supplied or services provided in the course of the trade.

3

A payment is made for purpose B if it is made in meeting the expenses of legal or other professional services in connection with a claim (a “claim about defects”) that—

a

work done in the course of the trade was defective,

b

goods supplied in the course of the trade were defective, or

c

services provided in the course of the trade were defective.

4

A payment is made for purpose C if it is made in insuring—

a

against liabilities arising out of any claim about defects, or

b

against the liability to meet the expenses of legal or other professional services in connection with any claim about defects.

5

A payment is made for purpose D if it is made for the purpose of collecting a debt which was brought into account in calculating the profits of the trade.