Corporation Tax Act 2010 section 63

Company with investment business ceasing to carry on UK property business

Section 63 provides a relaxation of the loss carry-forward rules where a company with investment business ceases to carry on a UK property business but continues as an investment company, allowing unrelieved UK property business losses to be converted into deductible management expenses.

• When a company with investment business stops carrying on a UK property business but remains an investment company, any unrelieved UK property business loss is still carried forward to the next accounting period
• The carried-forward loss is re-characterised as a deductible management expense, meaning it can be relieved against the company's total profits in the next and subsequent accounting periods for as long as the investment business continues
• A formal claim is required to deduct the loss (in whole or in part) as a management expense in the first accounting period following cessation, and this claim must be made within two years after the end of that period (or a longer period if HMRC allows)
• Once the loss has been carried forward into the first period after cessation and re-characterised as a management expense, the usual restriction in section 1219(1A) of CTA 2009 does not apply to that deduction, and any remaining balance carries forward under the normal management expenses rules without further special claims