Capital Allowances Act 2001 section 475A

Unrelieved qualifying expenditure: entry to cash basis

Section 475A deals with what happens to unrelieved qualifying expenditure sitting in a capital allowances pool when a trader switches from the accruals basis to the cash basis of accounting for tax purposes.

• When a trader enters the cash basis, any unrelieved qualifying expenditure in the capital allowances pool that would qualify as a deductible expense under the cash basis cannot be carried forward from the previous period
• A "cash basis deductible amount" is any pool expenditure that would be allowable as a deduction when calculating cash basis profits, on the assumption the expenditure was paid in the tax year the trader enters the cash basis
• The cash basis deductible amount must be determined on a just and reasonable basis in all the circumstances
• The definitions of "enters the cash basis" and "calculating the profits of a trade on the cash basis" used in section 1A apply equally to this section