Corporation Tax Act 2009 section 200

Election given effect in accounting period in which receipt is received

Section 200 explains how the tax charge works when a company elects under section 198 to treat a post-cessation receipt as if it were received in the earlier accounting period when the trade ceased.

• When a section 198 election is made, any additional tax arising is payable in the accounting period when the post-cessation receipt is actually received, not the earlier period when the trade ceased.
• The additional tax is calculated as the difference between the tax chargeable for the cessation period with the election (Amount A) and the tax that would have been chargeable for that period without the election (Amount B).
• If the company has already made other section 198 elections to carry back different post-cessation receipts to the same cessation period, the effect of those earlier elections must be taken into account when calculating both Amount A and Amount B.
• The relief operates in terms of a tax amount rather than an adjustment to taxable profits, following a broadly similar approach to the equivalent income tax rules.