CheckLists.Tax (beta)
Existence and timing of cessation
​
- Principles
​
- Identify wha tthe activity of the trade was and when that ceased (Kishore v. HMRC [2013] UKFTT 465, §69, Judge Sinfield).
- A suspension of trading followed by further trader (even after a period of years) is not necessarily a cessation (Kishore v. HMRC [2013] UKFTT 465, §68, Judge Sinfield).
Legislation:
Cases: Kirk & Randall Ltd v Dunn (1924) 8 TC 663;
HMRC manuals:
Commentary:
See also:
​
- Examples
- Partnership continued to trade in period after it had decided to wind up its activities and only completed existing contracts (Hillerns v. Murray 17 TC 77).
- Farmer's executors did not continue deceased's trade by exclusively taking steps to sell the herd after death (CIR v. Donaldson's Trustees 41 TC 161).
- Builder permanently discontinued trade on transfer of business to a company, retaining some houses (later sold) as investments (Bradshaw v. Blunden 36 TC 397).
- Right of vendor to 75% of profit on unexecuted orders at time of sale was the profit of a new business set up by the vendor in which the company acted as his agent or possibly amounted to retention of the old business to that extent (Southern v. Cohen's Executors 23 TC 566 (1940) CA).
- Building company held to be continuing to trade even after all development completed and all houses sold - it had provided guarantees and bought back houses when purchasers defaults (Gladstone Development Co Ltd v. Strick 30 TC 131 (1948, HC)).
- Profession was discontinued where doctor was struck off but challenging this decision (Bhadra v. HMRC [2011] UKFTT 573 (TC), §37, Judge Staker).
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
​
- Trade might cease, but not permanently
​
- A trade may cease without permanently ceasing if T might trade again if the circumstances change/an opportunity arises (Kishore v. HMRC [2013] UKFTT 465, §75, Judge Sinfield).
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
Effect on business asset disposal relief​
XX
XX
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
​
Costs of closing down trade
​
- Not incurred wholly and exclusively for the purposes of the trade
​
- Applies to redundancy payments or other payments on termination of trade.
- Statutory relief for statutory redundancy payments.
- HMRC relief for other redundancy payments.
- Contractual severance payments allowable if part of the price of engaging the employee.
Legislation:
Cases: CIR v. Anglo-Brewing Co Ltd 12 TC 803; HK CIR v. Cosmotron Manufacturing Co Ltd [1997] STC 1134;
HMRC manuals: BIM38390;
Commentary:
See also: SoP 11/81 and 1/94; Revenue Interpretations 103, 200;
​
Post-cessation receipts
​
- Release of a provision post-cessation
​
- No sum is received
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
- Release of a debt post-cessation
​
-
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
Post-cessation expenses
​
- Cannot be carried back as part of terminal loss
- Makes it important to identify precisely when the trade ceased.
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
​
​