Revenue Note for Guidance

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Revenue Note for Guidance

399 Losses in transactions from which income would be chargeable under Case IV or V of Schedule D

Summary

This section allows —

  • a loss under Case IV for an accounting period to be set off against Case IV income of the same accounting period, and
  • a loss under Case V for an accounting period to be set off against Case V income of an immediately preceding period of the same length.

Any unrelieved loss under either Case is permitted to be carried forward for set-off against corresponding income of subsequent accounting periods.

Details

“Case IV” losses

(1)(a) Relief is given against Case IV income for losses incurred in transactions which, if they had resulted in a profit, would have been charged under Case IV. Such a loss is to be set off first against any Case IV profits of the accounting period in which the loss was incurred, and then against Case IV profits of subsequent accounting periods, beginning with the earliest of such periods.

(1)(b) A loss on the sale of a certificate of deposit may be set off against other Case IV profits and also against the interest payable on the certificate if, had a profit been realised on the sale of the certificate, that profit would have been chargeable to tax under section 814.

“Case V” losses

(2) Where the “single source” (see section 97(1)) Case V computation for an accounting period results in a loss, the loss may, on due claim, be set off for corporation tax purposes against the Case V income of an immediately preceding period of the same length as the accounting period in which the loss was incurred. Any unrelieved balance may be carried forward and set off against Case V income of subsequent accounting periods, beginning with the earliest.

(3) The period to which the “carry back” relief for Case V losses is to be applied is a period of equal length to, and immediately preceding, the accounting period in which the “loss” (that is, the excess of deficiencies over surpluses) was incurred.

(4) The time within which the “carry back” relief for Case V relief may be claimed is 2 years from the end of the accounting period in which the “loss” was incurred.

Relevant Date: Finance Act 2019