Section 1048 | Treatment of deemed trading loss under section 1045

(1)This section applies if under section 1045 a company is treated as making a trading loss in an accounting period (“the deemed loss-making period”).^F1

(2)The trading loss may not be deducted from profits of a preceding accounting period under section 37(3)(b) or 42 of CTA 2010 unless the company is entitled to relief under section 1045 for the earlier period.^F2F3

(3)Subsection (4) applies if—

(za)the deemed loss-making period begins before 1 April 2017,^F4

(a)the company begins, in the deemed loss-making period or a later period, to carry on a trade, and^F5

(b)the trade is derived from the research and development in relation to which the relief mentioned in subsection (1) was obtained.

(4)In that case, so far as—^F6

(a)the company has not obtained relief in respect of the trading loss under any other provision, and

(b)the loss has not been surrendered under Part 5 of CTA 2010 (group relief),^F7

the trading loss is to be treated as if it were a loss of that trade brought forward under section 45 of CTA 2010 (relief of trading losses against future trading profits).

(4A)Subsection (4B) applies if—^F8

(a)the deemed loss-making period begins on or after 1 April 2017,^F8

(b)the company—^F8

(i)begins to carry on a trade in the deemed loss-making period which it continues to carry on in the following accounting period, or^F8

(ii)begins to carry on a trade in an accounting period after the deemed-loss making period, and^F8

(c)the trade is derived from the research and development in relation to which the relief mentioned in subsection (1) was obtained.^F8

(4B)In that case, so far as—^F8

(a)the company has not obtained relief in respect of the trading loss under any other provision, and^F8

(b)the loss has not been surrendered under Part 5 of CTA 2010 (group relief) (surrender of relief to group or consortium members),^F8

the trading loss is to be treated as if it were a loss of that trade brought forward under the relevant provision (see subsection (4C)) to the relevant period (see subsection (4D).

(4C)In subsection (4B) “the relevant provision” is—^F8

(a)section 45A(4) of CTA 2010 if—^F8

(i)the trade is not a ring fence trade within the meaning of Part 8 of CTA 2010 (see section 277 of that Act), and^F8

(ii)relief under section 37 of CTA 2010 would not be unavailable by reason of section 44 of that Act for a loss (assuming there was one) made in the trade in the relevant period (see subsection (4D), and^F8

(b)section 45B(2) of CTA 2010 if either of the conditions in paragraph (a) is not met.^F8

(4D)In subsection (4B) and (4C) “the relevant period” means—^F8

(a)in a case where the company began the trade in the deemed loss-making period and continued to carry on the trade in the following accounting period, that following accounting period, and^F8

(b)in a case where the company began the trade in an accounting period after the deemed loss-making period, the accounting period in which the company began the trade.^F8

(5)Subsections (4) and (4B) are subject to section 1062 (restriction on losses carried forward where tax credit claimed).^F9