VCM49450 - VC loss relief: companies: priority of claims

ICTA88/S573 (4) and (4A)

Loss relief claimed under the CVS, see VCM55000 onwards, which was introduced from 1 April 2000 by FA00/S63 and FA00/SCH15, is allowed in priority to any relief claimed under ICTA88/S573. Except for this, VC loss relief under ICTA88/S573 is allowed in priority to any deduction from CT profits generally. This means that the CT income which can be relieved is the total income (that is excluding chargeable gains) after allowing any CVS loss relief but before deducting:

• management expenses (ICTA88/S75 and ICTA88/S76),
• charges on income (ICTA88/S338),
• certain capital allowances under CAA01/S260 (3),
• group relief, and
• relief for losses under ICTA88/S393A.

Relief under ICTA88/S573 cannot create a trading loss, and cannot itself create or augment group relief but, because it takes priority, it may release trading losses, charges, management expenses or capital allowance for such purposes.