Corporation Tax Act 2009 section 127E

Adjustment: cessation of trading

Section 127E modifies the profit-spreading rules under section 127D when a farm company permanently ceases trading before the compensation can be spread over the usual three accounting periods.

• This section applies when a farm company permanently stops its farming trade before the end of the second consecutive accounting period following period X
• The normal three-period spreading calculation in section 127D is replaced with an adjusted calculation based on the actual number of remaining trading periods
• The amount deducted under step 2 of section 127D is divided equally among the accounting periods in which the company actually traded, starting from period X
• The resulting amount from that division is then included in the profit calculation for each of those remaining accounting periods