Corporation Tax Act 2009

Carry back of net losses on certain derivative contracts

663 Contracts to which section 641 applies

(1) This section applies in the case of a company if—

(a) there are net section 641 losses for an accounting period (“the loss period”),

(b) there are net section 641 gains for a previous accounting period (“the gains period”),

(c) the gains period falls wholly or partly within the period of 24 months immediately preceding the start of the loss period, and

(d) within two years after the end of the loss period the company makes a claim in respect of the whole or a part of the net section 641 losses for the loss period.

(2) The net section 641 gains for the gains period are reduced (but not below nil) by the amount in respect of which the claim is made.

(3) And the net section 641 losses for the loss period are reduced by the amount in respect of which the claim is made.

(4) For the purposes of this section—

(a) the net section 641 gains for a later period are reduced so far as possible before the net section 641 gains for an earlier period, and

(b) where a gains period falls partly before the start of the 24 month period mentioned in subsection (1), only the appropriate fraction of the net section 641 gains for that period may be reduced.

(5) For the meaning of “net section 641 gains”, “net section 641 losses” and “the appropriate fraction”, see section 664.

664 Meaning of certain expressions in section 663

(1) This section applies for the purposes of section 663.

(2) If for an accounting period L exceeds G, there are net section 641 losses for the period of an amount equal to the excess.

(3) If for an accounting period G exceeds the sum of L and N, there are net section 641 gains for the period of an amount equal to the excess.

(4) In this section—

• G is the sum of the amounts of any chargeable gains treated as accruing to the company in the period under section 641(3)(a) in respect of derivative contracts of the company (“section 641 gains”),

• L is the sum of the amounts of any allowable losses treated as accruing to the company in the period under section 641(3)(b) in respect of derivative contracts of the company (“section 641 losses”), and

• N is the sum of the amounts of any non-section 641 losses which would fall to be deducted in the period from section 641 gains, on the assumption in subsection (5).

(5) That assumption is that, as respects the accounting period, non-section 641 losses are treated as being deducted from non-section 641 gains, so far as possible, before any remainder is deducted from section 641 gains.

(6) The “appropriate fraction” is—

where—

• A is the number of days in the gains period which fall within the 24 month period mentioned in section 663(1)(c), and

• B is the number of days in the gains period.

(7) In this section—

• “deducted” means deducted in accordance with section 8(1) of TCGA 1992 (company’s total profits to include chargeable gains),

• “the gains period” has the same meaning as in section 663,

• “non-section 641 gains” means any chargeable gains accruing to the company in the accounting period, other than section 641 gains, and

• “non-section 641 losses” means any allowable losses of the company which may be deducted in the accounting period, other than section 641 losses.