CTM04710 - Corporation Tax: trading losses - relief against total profits: restrictions for farming companies
CTA2010/S48
Section 48 restricts loss relief of companies carrying on farming and market gardening trades in the UK or abroad. It excludes any loss incurred in carrying on such a trade from CTA2010/S37 (CTM04505) if a loss was incurred in carrying on that trade:
- in the accounting period,
- and in each of the chargeable periods which falls wholly or partly in the five years prior to the accounting period.
For this purpose you compute the loss without regard to capital allowances and charges. (This applies in spite of CAA01/S247, CAA01/S391 etc., which provide that normally you treat capital allowances as trading expenses.) ‘Chargeable period’ means any accounting period, or any basis period ending before the company's first accounting period. The meaning of ‘basis period’ is in CAA01/S6.
However there are certain exceptions to this restriction of loss relief. You can read about these exceptions at CTM04720 and CTM04730.
Other guidance
Where a company claims exemption from Section 48 under subsection (3) you should follow the guidance in BIM75640 to BIM75645. In BIM75620 - BIM75630 read the words ‘year of assessment’ as applying to the company's accounting period.
