Section 90 | Losses that are “terminal losses”

(1)Each of the following is a terminal loss made in the trade—

(a)the loss (if any) made in the trade in the period beginning with the start of the final tax year and ending with the cessation, and

(b)the loss (if any) made in the trade in the period consisting of so much of the previous tax year as falls in the 12 months prior to the cessation.

(2)The profit or loss of a period mentioned in subsection (1)(a) or (b) (a “terminal loss period”) is determined by reference to the profits or losses of periods of account of the trade (calculated for income tax purposes).

(3)If no period of account coincides with a terminal loss period, any of the following steps may be taken if they are necessary in order to arrive at the profit or loss of the terminal loss period—

(a)apportioning the profit or loss of a period of account between the part of the period that falls in the terminal loss period and the part that does not, and

(b)adding the profit or loss of a period of account (or part of a period) to profits or losses of other periods of account (or parts).

(4)Section 7A(3) and (4) of ITTOIA 2005 applies for the purposes of subsection (3) as it applies for the purposes of section 7A(2) of that Act.^F1F2

(5)Repealed^F3

(6)In the case of a notional trade carried on by a partner in a firm—

(a)the periods of account of the notional trade are taken to be the periods of account of the actual trade, and

(b)the references in subsections (2) and (3) to the profits or losses of periods of account of the trade are to the partner's share of the profits or losses of the actual trade determined in accordance with sections 849 and 850 of ITTOIA 2005.