Corporation Tax Act 2009 section 692

Allowance of accumulated net losses

Section 692 provides partial relief for debits on derivative contracts that have been disallowed because the contract had an unallowable purpose, by allowing accumulated net losses to be brought back into account as a debit where there are sufficient non-excluded credits to set them against.

• Where a derivative contract has an unallowable purpose and the disallowed debits exceed the disallowed exchange credits for a period, a net loss arises for that period
• Relief is given by bringing the "excess accumulated net losses" into account as a debit, effectively restoring some of the previously disallowed amounts
• The excess accumulated net losses are calculated on a cumulative basis using a five-step method that compares total accumulated net losses (less amounts already relieved) against total credits referable to the unallowable purpose (less non-excluded debits and amounts already relieved)
• The relievable amount for any period is the lower of the two figures produced by this comparison, ensuring that disallowed debits are only restored to the extent that non-excluded credits exist against which they can be offset