Commentary on Sections Overview Overview Section 1089: SMEs: amount of deduction
2834.This section gives the amount of the deduction if a small or medium-sized enterprise claims relief as a trade deduction. It is based on paragraph 14 of Schedule 13 to FA 2002.
2835.The normal operation of section 61 in Part 3 is suspended when allocating qualifying expenditure to an accounting period (see section 1099(2)). Pre-trading expenditure is allocated to periods of account in accordance with generally accepted accounting practice and is not treated as incurred when the company starts to trade.
2836.The company may be carrying on one trade and incur pre-trading expenditure in respect of another activity. Subsections (5) and (6) make clear that relief can be claimed on the pre-trading activity and given as a deduction in calculating the profits of the existing trade. This follows from paragraph 14(1)(b) of Schedule 13 to FA 2002, which requires only that the company be carrying on a trade. There is no requirement that the relief is given in calculating the profits of the trade for which the relief is given.