CTM07505 | Corporation Tax: tax avoidance involving carried-forward losses: overview

CTA10/PART14B

CTA10/PART14B is an anti-avoidance rule introduced by FA15 for the purposes of calculating the profits of accounting periods (APs) beginning on or after 18 March 2015. It applies to arrangements that seek to gain a Corporation Tax advantage by gaining access to certain carried-forward reliefs and ‘refreshing’ them into more versatile in-year deductions, a process known as corporate loss refreshing. CTM07510 describes loss refreshing, and CTM07550 has some examples.

The rule restricts the circumstances in which a company may make a deduction in respect of a ‘relevant carried-forward relief’. CTM07515 identifies these reliefs, and CTM07530 describes the new deductions covered by the rule.

Where the five conditions CTM07520 are met, the company will not be able to use its carried-forward reliefs against profits of the arrangement.

The rules apply to arrangements entered into at any time, but the denial of carried-forward loss relief will only have effect for APs beginning on or after 18 March 2015. Where an AP straddles that date, it is notionally split into two for the purposes of calculating the company’s taxable total profits under the restriction (CTM07545).