Section 674 — Corporation Tax Act 2010: Disallowance of trading losses

Disallowance of trading losses 674 1 In calculating the company's taxable total profits of an accounting period beginning before the change in ownership, no relief may be given under section 37 or 42 (relief for trade losses) for a loss made by the company in an accounting period ending after the change in ownership.

2 No relief may be given under section 45 , 45B, 303B or 303D for a loss made by the company in an accounting period beginning before the change in ownership by carrying forward the loss to reduce the profits of a trade of an accounting period ending after the change in ownership. 2A No relief may be given under section 45A or 303C for a loss made by the company in an accounting period beginning before the change in ownership by carrying forward the loss and deducting it from a company's total profits of an accounting period ending after the change in ownership.

3 For the purposes of this section and section 675—

a the accounting period in which the change in ownership occurs is treated as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period, and b the profits or losses of the accounting period are apportioned to the two periods.

4 The apportionment under subsection (3)(b) is to be made on a time basis according to the respective lengths of the two periods.

5 But if that method of apportionment would work unjustly or unreasonably in any case, such other method is to be used as is just and reasonable.

6 In subsection (2), “ profits of a trade ” includes interest or dividends treated as profits of a trade under section 46.