Commentary

D2.431 Relief for pre-entry loss—Order of set-off

Corporate tax
Corporate tax | Commentary

D2.431 Relief for pre-entry loss—Order of set-off

Corporate tax | Commentary

D2.431 Relief for pre-entry loss—Order of set-off

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.

In general, the chargeable gains included in a company's tax return is the total amount of chargeable gains accruing to the company in the accounting period1, after deducting any allowable losses both:

  1.  

    •     accruing to the company in the period, and

  2.  

    •     previously accruing to the company while it has been within the charge to corporation tax (so far as they have not been allowed against chargeable gains in a previous accounting period)

Pre-entry losses

The general rule is modified where a company has pre-entry losses. In this situation a pre-entry loss is given priority for set-off against gains (provided that the capital loss set-off restrictions (see D2.425) specify that the pre-entry loss is deductible2).

The rules regarding the order of set-off for a company's accounting period ending after 15 March 1993 (for chargeable gains accruing after 15 March 1993) are as

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