The company hired out cars, receiving advance payments. Such payments in respect of future accounting periods were brought forward as accruals. On the company’s sale the company was relieved of its obligations, but kept the accruals, and were charged to corporation tax on them as profits. For tax purposes the character of a payment was not necessarily judged once and for all when received. The accruals were properly treated as trade income for the period after the sale.
Citations:
Gazette 24-Feb-2000, Times 15-Mar-2000
Statutes:
Income and Corporation Taxes Act 1988 18(1)(a)(ii)
Jurisdiction:
England and Wales
Corporation Tax
Updated: 22 November 2022; Ref: scu.89708