Section 74ZA — Income Tax Act 2007: No relief for tax-generated losses

No relief for tax-generated losses 74ZA 1 This section applies if—

a during a tax year a person carries on (alone or in partnership) a trade, profession or vocation (“the relevant activity”),

b the person makes a loss in the relevant activity in that tax year, and c the loss arises directly or indirectly in consequence of, or otherwise in connection with, relevant tax avoidance arrangements.

2 No sideways relief or capital gains relief may be given to the person for the loss (but subject to subsection (5)).

3 In subsection (1) “ relevant tax avoidance arrangements ” means arrangements—

a to which the person is a party, and b the main purpose, or one of the main purposes, of which is the obtaining of a reduction in tax liability by means of sideways relief or capital gains relief.

4 In subsection (3) “ arrangements ” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).

5 This section has no effect in relation to any loss that derives wholly from qualifying film expenditure (see section 74D).

6 For the purposes of this section—

a capital gains relief is, in relation to a loss, the treatment of a loss as an allowable loss by virtue of section 261B of TCGA 1992 (use of trading loss as a CGT loss),

and b capital gains relief is given for a loss when it is so treated.