Commentary on Sections Overview Overview Section 189: Relief for unremittable amounts
770.This section sets out how the relief is given. It is based on ESC B38.
771.The section has more detail than the extra-statutory concession about the mechanics of the relief. This is necessary to give the certainty required for Self Assessment. Relief can be given only against the profits of the trade that include the unremittable amount. It cannot be used to create or increase a loss. But any excess relief is not lost. It is carried forward and set against future profits of the trade.
772.Subsection (1) sets out the basic condition that relief is given as a deduction in calculating trade profits.
773.Subsection (2) deals with the case in which the trader has profits but the relief would create a loss. The excess of the unremittable amounts is carried forward to the next period of account in which the trader has sufficient profits to absorb the excess.
774.Subsection (3) deals with the case in which the trader has losses and the relief would increase those losses. The total of the unremittable amounts is carried forward to the next period of account in which the trader has sufficient profits to absorb the excess.
775.Subsection (4) allows a deduction for any amounts brought forward in the next period of account in which the trader has made profits.
776.Subsection (5) prevents the relief creating a loss but, as explained in the commentary on subsections (2) and (3) any excess is not lost but carried forward.