Corporation Tax Act 2010 section 676BC

Disallowance of relief for trade losses

Section 676BC restricts the ability of a company to use carried-forward trade losses from before a change in ownership to shelter gains arising on assets that were transferred within a group before that ownership change.

• Where a company undergoes a change in ownership and a chargeable gain or non-trading chargeable realisation gain arises on a previously transferred asset, pre-change trade losses carried forward cannot be set against the portion of total profits that represents that gain.
• The restriction applies to the main carried-forward trade loss relief provisions (sections 45A, 45F, 303C and section 124B of FA 2012), and relief is only available when each notional accounting period is considered separately.
• The restriction also covers losses inherited from a predecessor company under the trade transfer rules, meaning that pre-change losses originally belonging to another group company likewise cannot shelter the relevant gain.
• The section only takes effect where the relevant gain is actually included in the company's total profits for the accounting period in which it accrues or arises, in accordance with the apportionment rules.