Finance Act, 1970

Debts set off against profits and subsequently released.

24.—(1) Where, in computing for tax purposes the profits or gains of a trade or profession, a deduction has been allowed for any debt incurred for the purposes of the trade or profession, then, if the whole or any part of that debt is thereafter released, the amount released shall be treated as a receipt of the trade or profession arising in the period in which the release is effected.

(2) (a) If in any such case as aforesaid the trade or profession has been permanently discontinued at or after the end of the period for which the deduction was allowed and before the release was effected, or is treated for tax purposes as if it had been so discontinued, section 20 shall apply as if the amount released were a sum received after the discontinuance.

(b) For the purposes of corporation profits tax, where an assessment under Case IV of Schedule D is made by virtue of paragraph (a), or would have been so made if the profits or gains were chargeable to income tax, the amount so assessed or which would have been so assessed shall be treated as income of the company received on the date on which the release was effected.

(3) This section applies to a release effected after the date of the passing of this Act.