Corporation Tax Act 2010 section 698

Restriction on relief for non-trading loss on intangible fixed assets

Section 698 restricts the relief available for a company's non-trading losses on intangible fixed assets following a change in ownership, particularly where chargeable gains or non-trading chargeable realisation gains form part of the company's total profits.

• The section limits relief under section 753 of CTA 2009 for non-trading losses on intangible fixed assets, but only where chargeable gains or non-trading chargeable realisation gains are included in the company's total profits for the accounting period in which those gains arise.
• Relief against total profits for the relevant accounting period can only be claimed by reference to each notional accounting period considered separately, not the accounting period as a whole.
• Where a non-trading loss on intangible fixed assets from a pre-change accounting period is carried forward to a post-change accounting period, that loss cannot be set against the portion of total profits that represents the relevant gain.
• The effect is to prevent pre-change intangible asset losses from sheltering post-change gains, ensuring that a change of ownership does not create inappropriate tax relief opportunities.