SCHEDULES
SCHEDULE 3Sideways relief etc
Amendments of Chapter 2 of Part 4 of ITA 2007
1
Chapter 2 of Part 4 of ITA 2007 (trade losses) is amended as follows.
2
In section 60(1)(c)
(overview of Chapter), for “(see sections 75” substitute “
and capital gains relief (see sections 74ZA
”
.
3
In section 64(8) (deduction of losses from general income)—
a
in paragraph (ba), for “74A” substitute “
74ZA
”
,
b
at the end of paragraph (c), insert “
and
”
, and
c
omit paragraph (e).
4
In section 72(5) (relief for individuals for losses in first 4 years of trade)—
a
in paragraph (ba), for “74A” substitute “
74ZA
”
,
b
at the end of paragraph (c), insert “
and
”
, and
c
omit paragraph (e).
5
Before section 74A insert—
74ZANo relief for tax-generated losses
1
This section applies if—
a
during a tax year a person carries on (alone or in partnership) a trade, profession or vocation (“the relevant activity”),
b
the person makes a loss in the relevant activity in that tax year, and
c
the loss arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements.
2
No sideways relief or capital gains relief may be given to the person for the loss (but subject to subsection (5)).
3
In subsection (1) “relevant tax avoidance arrangements” means arrangements—
a
to which the person is a party, and
b
the main purpose, or one of the main purposes, of which is the obtaining of a reduction in tax liability by means of sideways relief or capital gains relief.
4
In subsection (3) “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
5
This section has no effect in relation to any loss that derives wholly from qualifying film expenditure (see section 74D).
6
For the purposes of this section—
a
capital gains relief is, in relation to a loss, the treatment of a loss as an allowable loss by virtue of section 261B of TCGA 1992 (use of trading loss as a CGT loss), and
b
capital gains relief is given for a loss when it is so treated.
6
Omit section 74B (no relief for tax-generated losses in case of non-active individuals carrying on trade).
7
1
Section 74C (meaning of “non-active capacity” for purposes of sections 74A and 74B etc) is amended as follows.
2
In subsection (1), for “sections 74A and 74B” substitute “
section 74A
”
.
3
In the heading, for “sections 74A and 74B” substitute “
section 74A
”
.
8
1
Section 74D (meaning of “qualifying film expenditure” for purposes of sections 74A and 74B) is amended as follows.
2
In subsections (1) and (4), for “74A and 74B” substitute “
74ZA and 74A
”
.
3
In the heading, for “74A and 74B” substitute “
74ZA and 74A
”
.
9
Omit section 81 (dealings in commodity futures).