D2.426 Relief for pre-entry loss—Relief for trade assets
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.
The restriction on the deduction of pre-entry losses (see D2.425) is relaxed for gains arising on assets which have been acquired for trade or business purposes1 (although this relaxation is specifically excluded when there is a major change in the nature or conduct of the trade of the company realising the pre-entry loss).
These rules apply in almost identical format for deductions of pre-entry losses made pre or post 19 July 2011, although the rules were relaxed by Finance Act 2011 in two ways:
• for the set off of pre entry losses on or after 19 July 2011, the rule applies in relation to a 'trade or business'. Prior to 19 July 2011, the legislation just referred to a 'trade'. This relaxation in terminology means that the rule can apply even if the activities of the company do not amount to a trade, so long as they are sufficient to qualify as a business, and
• for the set off of pre entry losses on or after 19 July 2011, the rule applies to any company in the group that is carrying on the relevant business. In other words, after the company
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