Corporation Tax Act 2010 section 912

Recovery of bad debts following reduction under section 911

Section 912 deals with what happens when a lessor recovers a bad debt that previously reduced the cumulative accountancy rental excess under a finance lease arrangement.

• Where a lessor's cumulative accountancy rental excess was previously reduced because of a bad debt deduction, and the debt is later recovered or credited, the cumulative accountancy rental excess must be increased again
• The increase applies only if there is still a cumulative accountancy rental excess in the later period when the recovery occurs
• The amount of the increase equals the amount recovered or credited, but cannot exceed the total of the reductions that were originally made for the bad debt
• This provision effectively reverses the earlier bad debt relief to the extent that the debt turns out to be recoverable after all