Part 4

Loss relief
Chapter 2

Trade losses

Post-cessation trade relief

Meaning of “qualifying payment”
97
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.