Corporation Tax Act 2010 section 914

Recovery of bad debts following reduction under section 913

Section 914 deals with what happens when a lessor recovers all or part of a bad debt that previously led to a reduction in the cumulative normal rental excess under a finance lease.

• Where a lessor's cumulative normal rental excess was previously reduced because of a bad debt deduction, and the debt is later recovered or credited, the cumulative normal rental excess for that later period must be increased.
• If the amount recovered does not exceed the total of the earlier reductions, the cumulative normal rental excess is increased by the full amount recovered.
• If the amount recovered exceeds the total of the earlier reductions, the increase is capped at the total of those reductions — the excess recovery does not further inflate the cumulative normal rental excess.
• The term "bad debt deduction" takes its meaning from the definition in section 911(6) of the Corporation Tax Act 2010.