Corporation Tax Act 2009 section 970

Rule restricting deductions for bad debts

Section 970 restricts the circumstances in which a company holding an office can claim a deduction for bad debts owed to it when calculating the income from that office.

• This rule applies only to debts that fall outside the loan relationships rules in Part 5 of the Act.
• No deduction is allowed for a debt owed to the company in calculating its office-holding income, except by way of an impairment loss or where the debt is released as part of a statutory insolvency arrangement wholly and exclusively for the purposes of the office.
• The definition of "debt" is broad and includes any obligation or liability that is to be discharged otherwise than by the payment of money.
• A corresponding rule restricting deductions for bad trade debts exists separately under section 55 of the same Act.