Finance Act 2006

Relief for expense under paragraph 3 [F1 , 23(4A)] or 33 otherwise giving rise to carried forward loss U.K.

Textual Amendments

F1 Words in Sch. 10 para. 39 heading inserted (retrospectively) by Finance Act 2008 (c. 9), s. 56(4)(5)

39 (1) This paragraph applies if— U.K.

(a) there is a qualifying change of ownership in relation to a company on any day (“the relevant day”),

(b) on the following day the company is, accordingly, treated under paragraph 3 or 33 as incurring an expense of a business and an accounting period of the company begins,

(c) the company makes a loss in that accounting period, [F2 or a later accounting period,]

(d) some or all of that loss would otherwise be carried forward to the next accounting period of the company [F3 after the accounting period in which the loss is made] (“the subsequent accounting period”), and

(e) the subsequent accounting period starts within the period of [F4 5 years beginning immediately after] the relevant day and does not start as a result of paragraph 3 or 33.

[F5 (1A) This paragraph also applies if—

(a) a company is treated under paragraph 23(4A) as incurring an expense of a business in an accounting period,

(b) the company makes a loss in that accounting period [F6 or a later accounting period,]

(c) some or all of that loss would otherwise be carried forward to the next accounting period of the company [F7 after the accounting period in which the loss is made] (“the subsequent accounting period”), [F8 and

(d) the subsequent accounting period starts within the period of 5 years beginning with the day that is the relevant day within the meaning of paragraph 23(1) and does not start as a result of paragraph 3 or 33.]]

(2) So much of the loss (or part of the loss) that would otherwise be so carried forward as derives from the expense under paragraph 3[F9 , 23(4A)] or 33 [F10 or this sub-paragraph] is instead to be treated for corporation tax purposes as [F11 giving rise to an expense of the relevant amount].

[F12 (2A) The relevant amount is the amount of the loss treated as an expense increased by—

( D / 365 ) x R

where—

D is the number of days in the accounting period in which the loss is made, and

R is the percentage rate applicable to section 826 of ICTA under section 178 of FA 1989.]

(3) The [F13 amount of the] expense under this paragraph is allowed as a deduction in calculating for corporation tax purposes the profits of the business for the subsequent accounting period.

(4) For the purpose of determining how much of a loss derives from an expense under paragraph 3[F14 , 23(4A)] or 33 [F15 or this paragraph], the loss is to be calculated on the basis that [F16 that expense] is the final amount to be deducted.

Textual Amendments

F2 Words in Sch. 10 para. 39(1)(c) inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(2)(a)

F3 Words in Sch. 10 para. 39(1)(d) inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(2)(b)

F4 Words in Sch. 10 para. 39(1)(e) substituted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(2)(c)

F5 Sch. 10 para. 39(1A) inserted (retrospectively) by Finance Act 2008 (c. 9), s. 56(4)(a)(5)

F6 Words in Sch. 10 para. 39(1A)(b) substituted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(3)(a)

F7 Words in Sch. 10 para. 39(1A)(c) inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(3)(b)

F8 Sch. 10 para. 39(1A)(d) and word inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(3)(c)

F9 Words in Sch. 10 para. 39(2) inserted (retrospectively) by Finance Act 2008 (c. 9), s. 56(4)(b)(5)

F10 Words in Sch. 10 para. 39(2) inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(4)(a)

F11 Words in Sch. 10 para. 39(2) substituted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(4)(b)

F12 Sch. 10 para. 39(2A) inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(5)

F13 Words in Sch. 10 para. 39(3) inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(6)

F14 Words in Sch. 10 para. 39(4) inserted (retrospectively) by Finance Act 2008 (c. 9), s. 56(4)(c)(5)

F15 Words in Sch. 10 para. 39(4) inserted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(7)(a)

F16 Words in Sch. 10 para. 39(4) substituted (with effect in accordance with Sch. 10 para. 9(1) of the amending Act) by Finance Act 2009 (c. 10), Sch. 10 para. 8(7)(b)