Commentary

D2.425 Relief for pre-entry loss—General rule

Corporate tax
Corporate tax | Commentary

D2.425 Relief for pre-entry loss—General rule

Corporate tax | Commentary

D2.425 Relief for pre-entry loss—General rule

The rules in this article apply only where the loss buying rules (D2.402–D2.406) do not apply. As a result, for accounting periods ending after 4 December 2005, the following provisions will normally only apply in cases where there is no arrangement for avoiding tax, eg on a merger or takeover.

Utilisation of pre-entry losses

For the set off of pre-entry losses on or after 19 July 2011 (ie accounting periods ending on or after this date), a pre-entry loss can only be set against1:

  1.  

    •     gains that accrued to the company before the date on which it became a member of the group2

  2.  

    •     gains realised on an asset which was held by the company immediately before the date on which it became a member of the group3, or

  3.  

    •     gains on certain assets acquired for trade purposes4 (see D2.426)

For the set off of pre-entry losses before 19 July 2011, a pre-entry loss could be set against5:

  1.  

    •     gains that accrued to the company before the date on which it became a member of the group6. (If the loss was realised after joining the group such set-off was only permitted if it was as a result of that company joining the group that the pre-entry asset on which the loss arose came into the

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