Annex 1: Minor Changes in the Law Change 19: Trading income etc: income charged on withdrawal of relief after source ceases: sections 82, 101, 108 and 1277
This change treats certain amounts as post-cessation receipts and other amounts as if the source had not ceased.
It brings the income tax and corporation tax codes back into line.
Sections 79(9), 79A(4), 79B(4), 83A(4), and 84(4) of ICTA and section 55(4) of FA 2002 create a charge under Schedule D Case VI if the trader is not chargeable under Schedule D Case I or II in the accounting period in which a benefit is received. Section 491(3) of ICTA creates a similar charge on a distribution by a mutual concern. Section 584(4) of ICTA creates a charge under Schedule D Case VI if overseas income becomes remittable after the trade or other source of income has ceased.
This Act unpacks Schedule D Case VI charges and deals with the income where it logically belongs. If the income becomes trading income, by treating the benefit or distribution as a post-cessation receipt, this Act:
	allows the trader to make the same deductions as those available from other post-cessation receipts;
	removes any possibility that the benefit is charged both by the specific rule about benefits and by any general rule; and
	preserves the loss relief position by amending section 396 of ICTA and listing Chapter 15 of Part 3 of this Act in section 834A of ICTA (see Schedule 1 to this Act).
Section 1277(4) of this Act contributes to the unpacking of Schedule D Case VI charges. It treats the source of the overseas income as not having ceased, where income that was relieved under section 1275 ceases to be unremittable after the source has actually ceased. The income is then charged under the provision that would apply had section 1276 (withdrawal of relief) applied instead. The loss relief position under section 396 of ICTA is again preserved by Schedule 1 to this Act.
In some cases this change may allow relief for deductions from post-cessation receipts that are not available in the source legislation.
This change is in taxpayers’ favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.