Corporation Tax Act 2010 section 638

Allowable deductions

Section 638 sets out the rules for deducting losses, expenses and debits against amounts that would otherwise be chargeable to corporation tax on winding up receipts of a former deposit-taking business.

• When calculating corporation tax on winding up receipts, a company may deduct losses, expenses and debits that would have been allowable against the trade profits had the deposit-taking trade not permanently ceased.
• No deduction is permitted for any loss, expense or debit that arises directly or indirectly from the cessation of the trade itself.
• Expenses and debits qualify only if incurred after winding up proceedings began (or, if later, after the trade permanently ceased), while losses qualify if incurred at or before the permanent cessation.
• No deduction is available under this section if the same amount has already been relieved under this section or any other provision of the Tax Acts.