Corporation Tax Act 2010 section 674

Disallowance of trading losses

Section 674 restricts the use of trading losses where there has been a change in company ownership, preventing losses from one side of the ownership change being set against profits on the other side.

• Post-change trading losses cannot be carried back and set against profits of pre-change accounting periods
• Pre-change trading losses cannot be carried forward against trade profits or total profits of post-change accounting periods
• The accounting period in which the ownership change occurs is split into two notional periods — one ending at the point of change and one covering the remainder
• Profits and losses are apportioned between these two notional periods on a time basis, unless that method would produce an unjust or unreasonable result