D1.740 Relief for non-trading deficits—pre 1 April 2017 deficits and charities
The provisions in this article apply, broadly, where a non-trading deficit arose before 1 April 2017. They also apply (pre and post 1 April 2017) where the company is a charity, For the provisions that apply on or after 1 April 2017 to companies other than charities see 'Relief for non-trading deficits—post 1 April 2017 deficits' at D1.739.
Finance (No 2) Act 2017 introduced wholesale reform of the loss carry forward rules for non-trading deficits1 with the stated aim being to simplify the rules and provide more flexibility in how losses carried forward can be relieved.
For ease, the commentary has therefore been broken down into a discussion of the rules that apply for accounting periods commencing on or after 1 April 2017 and those that apply for earlier periods ('Relief for non-trading deficits—post 1 April 2017 deficits' at D1.739), although a lot of the post 1 April 2017 legislation mirrors the pre April 2017 rules.
Where a company's accounting period straddles 1 April 2017, the periods before and after 1 April 2017 are treated as two separate accounting periods and profits/ losses are time apportioned or (where that would produce an unreasonable result) apportioned on a just and reasonable basis2.
In this article references to a deficit are to a non-trading deficit on a loan relationship (see D1.739). A deficit period means an accounting period in which a company has such a deficit3.
Summary of use of pre and post 1 April