Section 732 | Reversal of previous accounting gain

From legislation.gov.uk

(1)This section applies if—

(a)in a period of account a loss is recognised in determining a company's profit or loss (“the recognised loss”),

(b)the loss wholly or partly reverses a gain recognised in a previous period of account (“the reversed gain”), and

(c)a credit was brought into account for tax purposes under Chapter 2 (credits in respect of intangible fixed assets) in respect of that gain (“the previous credit”).

(2)A corresponding debit must be brought into account for tax purposes.

(3)The amount of that debit is—

Formula

RL \times \frac{PC}{RG}

where—

RL is the recognised loss,

PC is the previous credit, and

RG is the reversed gain.

(4)References in this section to the recognition of a loss that reverses a gain recognised in a previous period of account do not include a loss recognised—

(a)by way of amortisation of an asset that has previously been the subject of a revaluation, or

(b)as a result of an impairment review of such an asset.

(5)In subsection (4) “revaluation” has the same meaning as in section 723 (see subsection (5) of that section).