Commentary

D7.5158 Transfers of unrelieved losses on a change of basis

Corporate tax
Corporate tax | Commentary

D7.5158 Transfers of unrelieved losses on a change of basis

Corporate tax | Commentary

D7.5158 Transfers of unrelieved losses on a change of basis

The rules in this division apply for accounting periods beginning before 1 January 2013. For accounting periods beginning on or after 1 January 2013 see Division D7.4.

In the normal course of events unrelieved losses of the transferor would automatically accrue for the benefit of the transferee by virtue of ICTA 1988, s 444A(3) (see D7.5157). However that mechanism is not effective if the transferor and transferee are on different bases of assessment. To cater for this circumstance ICTA 1988, ss 444AZA and 444AZB1 allow unrelieved losses on gross roll up business to transfer from a transferor taxed on the I-E basis to a transferee taxed on a trading profits basis and vice versa.

The first case applies if there is a transfer of insurance business:

  1.  

    (a)     from a transferor that would have been taxed on the I-E basis if it had continued to carry on the transferred business;

  2.  

    (b)     to a transferee taxed on a trading profits basis in the first period of account after the transfer by virtue of ICTA 1988, s 431G(3); and

  3.  

    (c)     the general conditions for transfer of losses in CTA 2010, Pt 22 Ch 1 are satisfied2.

In such

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