Commentary

D1.1127B Anti-avoidance—carry forward relief and loss refreshing

Corporate tax
Corporate tax | Commentary

D1.1127B Anti-avoidance—carry forward relief and loss refreshing

Corporate tax | Commentary

D1.1127B Anti-avoidance—carry forward relief and loss refreshing

Anti-avoidance provisions apply to prevent companies converting carried forward losses into in-year deductions, a process sometimes known as corporate loss refreshing. Essentially the provisions operate where a company has entered into an arrangement to create new profits to accelerate the use of carried forward losses and to also create new in-year deductions which reduce the taxable income of the company or the group, effectively turning the carried-forward loss into an in-year relief, thereby refreshing the loss1. Where the anti-avoidance rule applies the relevant carried forward losses are prevented from being used against the amount of profit arising from the arrangement2.

The provisions apply to 'relevant carried forward losses' which are defined as3:

  1.  

    •     trading losses which have been carried forward from a previous accounting period (see D1.1106 and D1.1108)4

  2.  

    •     non-trading loan relationship deficits which have been carried forward from a previous accounting period (see D1.739 and D1.740)5

  3.  

    •     management expenses which

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