Corporation Tax Act 2009 section 193

Debts released after cessation

Section 193 deals with the tax treatment of trade debts that are released after a business has permanently ceased trading, treating the released amount as a post-cessation receipt.

• Where a trade expense was previously deducted in calculating profits and gave rise to a debt, and the trade has since permanently ceased, any subsequent release of that debt triggers a tax charge.
• The amount of the debt released is treated as a post-cessation receipt, meaning it remains taxable even though the trade is no longer active.
• This rule does not apply if the debt release forms part of a statutory insolvency arrangement, such as a formal liquidation or administration process.
• The section mirrors the treatment that applies to debts released during an ongoing trade, ensuring consistent taxation whether a business is still operating or has ceased.