Commentary on Sections Overview Chapter 2: Accrued income profits and losses Section 638: Excluded persons: disregard of certain payments and transfers
1880.This section disregards certain payments treated as made to or by a person, if that person is an “excluded transferor” or “excluded transferee”, in calculating whether that person has made accrued income profits or losses. It is based on section 715 of ICTA.
1881.By virtue of this section, the accrued income scheme does not (or does not in full) apply to them. This is either because it is unnecessary to apply the scheme to them or because applying the scheme would be unduly burdensome for both taxpayers and HMRC. The section also explains the consequences of being excluded from the scheme.
1882.Although the section generally applies to both transferors and transferees, and operates by disregarding payments treated as made by or to a person, subsection (3) provides that in determining under section 630 whether a person has made accrued income profits, no account is taken of the transfer. There is an effect only for the transferor in that case.
1883.Under these provisions it is persons who are excluded in relation to a transfer rather than transactions. This means that, in respect of the same transfer, the transferor may be excluded but not the transferee (and vice versa).