1.6 (i) Post-cessation receipts

Question 1

Do post-cessation receipts apply to companies?

Answer 1

Yes, there are rules that apply to companies in respect of post-cessation receipts.

Question 2

What are post-cessation receipts? re: companies

Answer 2

Receipts of a trade arising after it ceases.

Question 3

What can post-cessation receipts be relieved against for companies?

Except when?

Answer 3

Relieved by expenses that would have been deductible in arriving at trading profits except where the expense arises from the cessation itself.

Question 4

What election can companies make regarding post-cessation receipts? re: companies

Answer 4

They can elect for:

• receipts within the first six years after cessation;
• to be related back to the date of cessation.

Question 5

When must the election for post-cessation receipts be made? re: companies

Answer 5

Within two years of the end of the accounting period of the receipt.

Therefore, if the receipt arises in the accounting period ended 31 December 2012, the company has until 31 December 2014 to make the election.

IN THAT ORDER
1. Receipt arises in accounting period ended 31 Dec 2012
2. Two years of end of the AP, ie 31 Dec 2013 and 31 Dec 2014
3. Until 31 Dec 2014 to make election

This could permit receipts to be sheltered by otherwise unused trading losses that had accrued.