Restriction of carry forward and carry back of trading losses

Relief for trading losses relieved in a subsequent or previous period is not allowed in the following circumstances:

  • where in any period of five years (beginning three years before the change in ownership) there is both a change in the ownership of a company and a major change in the nature or conduct of the company's trade with both changes falling on or after 1 April 2017
  • where in any period of three years (beginning three years before the change in ownership) there is both a change in the ownership of a company and a major change in the nature or conduct of the company's trade where either or both changes occurred before 1 April 2017
  • at any time after the scale of the company's activities has become small or negligible and before any considerable revival there is a change in the ownership of the company

CTA 2010, s 673

Where any of the above circumstances applies, a trading loss incurred in an accounting period beginning before the change in ownership may not be relieved against profits of an accounting period ending after the change of ownership. Following the reform of corporation tax losses, no relief may be given against total profits for trading losses incurred on or after 1 April 2017 which are subject to the change in ownership provisions. For further details of the reform of corporation tax losses, see the Introduction to the reform of corporation tax loss relief guidance note and subsequent guidance notes. CTA 2010, ss 674(1)-(2A), 45A

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