Section 1048 — Corporation Tax Act 2009: Treatment of deemed trading loss under section 1045

Treatment of deemed trading loss under section 1045 1048 1 This section applies if under section 1045 a company is treated as making a trading loss in an accounting period (“the deemed loss-making period”) .

2 The trading loss may not be deducted from profits of a preceding accounting period under section 37(3)(b) or 42 of CTA 2010 unless the company is entitled to relief under section 1045 for the earlier period.

3 Subsection (4) applies if—

za the deemed loss-making period begins before 1 April 2017, a the company begins, in the deemed loss-making period or a later period, to carry on a trade, and b the trade is derived from the research and development in relation to which the relief mentioned in subsection (1) was obtained.

4 In that case, so far as—

a the company has not obtained relief in respect of the trading loss under any other provision, and b the loss has not been surrendered under Part 5 of CTA 2010 (group relief) , the trading loss is to be treated as if it were a loss of that trade brought forward under section 45 of CTA 2010 (relief of trading losses against future trading profits). 4A Subsection (4B) applies if—

a the deemed loss-making period begins on or after 1 April 2017, b the company—

i begins to carry on a trade in the deemed loss-making period which it continues to carry on in the following accounting period, or ii begins to carry on a trade in an accounting period after the deemed-loss making period, and c the trade is derived from the research and development in relation to which the relief mentioned in subsection (1) was obtained. 4B In that case, so far as—

a the company has not obtained relief in respect of the trading loss under any other provision, and b the loss has not been surrendered under Part 5 of CTA 2010 (group relief) (surrender of relief to group or consortium members), the trading loss is to be treated as if it were a loss of that trade brought forward under the relevant provision (see subsection (4C)) to the relevant period (see subsection (4D). 4C In subsection (4B) “the relevant provision” is—

a section 45A(4) of CTA 2010 if—

i the trade is not a ring fence trade within the meaning of Part 8 of CTA 2010 (see section 277 of that Act),

and ii relief under section 37 of CTA 2010 would not be unavailable by reason of section 44 of that Act for a loss (assuming there was one) made in the trade in the relevant period (see subsection (4D),

and b section 45B(2) of CTA 2010 if either of the conditions in paragraph (a) is not met. 4D In subsection (4B) and (4C) “ the relevant period ” means—

a in a case where the company began the trade in the deemed loss-making period and continued to carry on the trade in the following accounting period, that following accounting period, and b in a case where the company began the trade in an accounting period after the deemed loss-making period, the accounting period in which the company began the trade.

5 Subsections (4) and (4B) are subject to section 1062 (restriction on losses carried forward where tax credit claimed).