CTM06805 - Corporation Tax: loss buying: assets transferred between companies: restriction of reliefs

CTA10/S676BC and S676DC

Where a gain meets the conditions of CTA10/PART14/CHAPTER2B and CHAPTER2D, the company is prevented from setting certain losses against profits representing a transferred gain or gain on a transferred asset.

Only losses incurred before the change in company ownership are restricted.聽 This means that if the company has an accounting period that begins before and ends on or after the change in ownership it will need to apportion amounts following the method set out in legislation to determine the amount of losses affected by the restriction.

Profits that do not relate to the gain are not affected by CHAPTER2B and CHAPTER2D.聽 The restriction only applies to relief against profits representing the gain.

Disallowance of relief for trade losses

CTA10/CHAPTER2B restricts relief for trading losses under the following provisions (S676BC):

  • from 1 April 2017 trade losses carried forward against total profits (CTA10/S45A),
  • terminal relief for trade losses carried forward (CTA10/S45F),
  • excess carried-forward non-decommissioning losses of ring fence trades (CTA10/S303C), and
  • excess carried-forward basic life assurance and general annuity business (BLAGAB) losses (FA12/S124B).

Disallowance of group relief for carried-forward losses聽

CTA10/CHAPTER2D restricts group relief for carried forward losses under CTA10/PART5A/CHAPTER3 for losses carried forward under any of the following provisions

  • non-trading deficits from loan relationships carried forward against total profits (CTA09/S463G (6)),
  • non-trading losses on intangible fixed assets carried forward (CTA09/S753 (3)),
  • expenses of management carried forward (CTA09/S1223),
  • from 1 April 2017 trade losses carried forward against total profits (CTA10/S45A (3)),
  • UK property business losses carried forward (CTA10/S62 (5)(b), S63 (3)(a)),
  • excess carried-forward non-decommissioning losses of oil and gas ring fence trades (CTA10/S303B (2), S303D (3)), and
  • excess carried-forward BLAGAB losses (FA12/S124A (2), S124C (3)).


Other reliefs

CTA10/PART14/CHAPTER4, introduced at an earlier date, restricts relief for other losses and amounts in circumstances involving the transfer of an asset.