Corporation Tax Act 2009 section 95

Acquisition of trade: receipts from transferor's trade

Section 95 deals with the tax treatment of sums arising from a trade that are received by a successor company after the original trader has permanently ceased carrying on that trade and transferred the right to receive those sums as part of handing over the business.

• When a trader permanently ceases a trade and transfers the right to receive outstanding sums to a successor who then carries on that trade, those sums are taxed as trading receipts of the successor rather than the predecessor.
• The sums are brought into account in calculating the profits of the successor's trade in the accounting period in which they are actually received.
• Only sums that were not already accounted for in the predecessor's trading profits before cessation are caught by this rule.
• These sums are specifically excluded from being treated as post-cessation receipts of the predecessor, which would otherwise be the default treatment under Chapter 15 of Part 3 of the Act.