Commentary

D1.1110 Terminal loss relief

Corporate tax
Corporate tax | Commentary

D1.1110 Terminal loss relief

Corporate tax | Commentary

D1.1110 Terminal loss relief

In an accounting period in which a company ceases to trade both trading losses realised in the accounting period of cessation and carried forward trading losses which are carried forward into the cessation period (see D1.1106 and D1.1108) can be carried back for offset against previous year's profits if not relieved in the period of cessation1. See further details of these two reliefs below.

Where only a part of a trade is discontinued, the provisions do not apply in respect of that part which has been discontinued unless it is a separate trade, see Electronics Ltd2 where it was held that relief was not available for losses on the closure of two divisions of a wholly-owned subsidiary of a company operating on a global basis. The Special Commissioners decided that the company carried on a single trade which had not ceased. The question of whether there was one or more trades turned on the level of generality of the description of the trade, and in this particular case the Commissioners decided it would be a mistake to break down electronic products into discrete categories and regard them as separate trades. There was one global trade by the whole group and therefore the same was true in the UK. Further cases on the discontinuance of a trade are

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial