What does section 357UH of the Corporation Tax Act 2010 do?

Section 357UH ensures that terminal losses from theatrical productions which qualify as Northern Ireland losses retain their Northern Ireland character when redirected to a different trade or transferred to a different company. This preserves the correct corporation tax rate treatment within the Northern Ireland regime.

How are terminal losses from theatrical productions redirected under section 357UH?

A company with a terminal loss can either elect to treat it as a loss brought forward of a different trade it carries on, or claim to transfer it to a different company. Under section 357UH, if the terminal loss is a Northern Ireland loss, the redirected loss retains its Northern Ireland status in both scenarios.

Why does preserving Northern Ireland loss status matter for terminal losses?

Northern Ireland losses and mainstream losses are subject to different corporation tax rates. Preserving the Northern Ireland classification ensures loss relief is applied at the correct rate within the company's tax computation. Without this provision, a Northern Ireland terminal loss could lose its special status when redirected, distorting the tax treatment.

Can a Northern Ireland terminal loss be transferred to a group company and retain its status?

Yes. Where a company claims to transfer all or part of a Northern Ireland terminal loss to a fellow group company, section 357UH requires the receiving company to treat the transferred amount as a Northern Ireland loss brought forward. The Northern Ireland character of the loss is fully preserved in the recipient company's computation.

Corporation Tax Act 2010 section 357UH

Terminal losses

Section 357UH ensures that when terminal losses from theatrical productions are redirected — either to a different trade or to a different company — and those losses qualify as Northern Ireland losses, they retain their Northern Ireland character when carried forward.

This section modifies the general terminal loss rules for theatrical productions (in section 1217MC of CTA 2009) to fit the Northern Ireland corporation tax regime.
Where a company elects to treat all or part of a terminal loss as a loss brought forward of a different trade, and the terminal loss is a Northern Ireland loss, the carried-forward loss is treated as a Northern Ireland loss brought forward.
Where a company claims to treat all or part of a terminal loss as a loss brought forward by a different company, and the terminal loss is a Northern Ireland loss, the carried-forward loss is likewise treated as a Northern Ireland loss brought forward.
The effect is that the Northern Ireland status of the loss is preserved regardless of which relief mechanism the company uses to redirect the terminal loss.

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