Commentary on Sections Overview Chapter 3: Amounts treated as expenses of management Timing
3136.In sections 1240(4) and 1242(4) there is a special timing rule for management expenses. For trading income the Act adopts a “person-based” approach. So the corresponding trading income rules refer to a “payment … made after the employer has permanently ceased to carry on the trade [or part of the trade]”.
3137.In these sections the rules refer to a payment “referable to … an accounting period beginning after the business [or the part of the business] has [permanently] ceased to be carried on”. This produces the same result as the trading income sections, without the need to explain the rule for businesses carried on in partnership.
3138.If an investment business ceases, the closing words of the second sentence of section 90(1) and section 579(3A) of ICTA make the payments referable to the “accounting period ending on the last day on which the … business was carried on”. These sections specify instead “the last accounting period in which the business was carried on”. See Change 82 in Annex 1.