Taxes Consolidation Act 1997 section 92

Receipts and losses accruing after change treated as discontinuance

Section 92 deals with the tax treatment of post-cessation receipts and irrecoverable debts (bad debts) when a trade or profession is treated as having been discontinued due to a change in the persons carrying it on, and a new trade or profession is deemed to have commenced.

• Where a change in the persons carrying on a trade or profession results in a deemed discontinuance, the post-cessation receipts rules in sections 91 and 95 apply to the predecessor, taxing them on any amounts received after cessation.
• If the right to receive post-cessation receipts (including bad debts) is transferred to the successor at the time of the change, the predecessor is not taxed on those amounts — instead, they are treated as trading receipts of the successor's business in the period they are received.
• The successor may claim a tax deduction for any debts inherited from the predecessor that prove to be irrecoverable, provided those debts had been credited in the predecessor's tax computations before the change.
• Where the predecessor had already claimed a deduction for a bad or doubtful debt under section 81(2)(i), the successor's deduction is limited to the amount by which the irrecoverable debt exceeds the deduction already allowed to the predecessor.