Corporation Tax Act 2010 section 427

No carry back of loss against the income

Section 427 prevents trade losses arising from a plant or machinery leasing business from being carried back against earlier period profits that derive from the relevant income.

• Applies where the notional business is a UK trade (wholly or partly) with profits chargeable to corporation tax as trading income
• No part of a trade loss may be carried back under the general loss relief rules or terminal loss relief provisions against the portion of total profits derived from the relevant income
• When calculating how much of the earlier period's total profits derive from the income, the income is treated as the final amount to be added
• The effect is to ring-fence the income-related profits in earlier periods so they cannot be reduced by losses carried back from later periods