BKM306400 | Bank loss restriction: carried forward reliefs outside the restriction: reliefs arising before a company begins relevant regulated activity

CTA10/S269DE

Any carried-forward reliefs arising in accounting periods prior to the one in which a company commences relevant regulated activity are not subject to the bank loss restriction and normal rules apply (see BKM303250).The point at which a company begins to undertake relevant regulated activity is defined in CTA10/S269CL as the first day on which it undertakes relevant regulated activity, or, if the company is a successor to a trade involving relevant regulated activity, the first day on which the predecessor company undertook relevant regulated activity.

Relevant regulated activity is defined in CTA10/S269BB, and the guidance is in BKM302450. A company does not need to be regulated (within the UK or overseas) to be taking part in relevant regulated activity. This means that a company undertaking relevant regulated activity in a country without a regulator is still undertaking relevant regulated activity, and a company that was undertaking relevant regulated activity before regulation commenced was still undertaking relevant regulated activity.

A company that undertakes relevant regulated activity will only be a banking company if it also meets the other conditions set out in CTA10/s269B and covered in BKM302200. This means a banking company may have pre 2015 carried-forward losses which arose before it began relevant regulated activity and pre 2015 carried-forward losses which arose after it began relevant regulated activity but before it became a banking company.

The pre 2015 carried-forward losses which arose before it began relevant regulated activity are not subject to the bank loss restriction while the pre 2015 carried-forward losses which arose after it began relevant regulated activity are subject to the bank loss restriction.