Corporation Tax Act 2010 section 48

Farming or market gardening

Section 48 restricts the availability of trade loss relief for companies carrying on farming or market gardening where losses have been sustained over a prolonged period.

• Loss relief against total profits is denied where a farming or market gardening trade has made losses (ignoring capital allowances) in the current accounting period and in every accounting period falling wholly or partly within the preceding five years — broadly, six successive loss-making years.
• The restriction does not apply where the farming or market gardening forms part of, and is ancillary to, a larger trading undertaking.
• The restriction also does not apply where the activities meet a reasonable expectation of profit test, or where the trade was started (or treated as started) within the prior five-year period.
• For the purposes of testing whether losses have been made throughout the prior period, capital allowances and balancing charges are stripped out so that only the underlying trading result is considered.