Taxes Consolidation Act, 1997 (Number 39 of 1997)
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396B Relief for certain trading losses on a value basis.
(1) In this section—
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“a loss from the sale of goods”, in relation to the course of a trade in an accounting period, means such amount as would be the amount of the income from the sale of goods in that period if, notwithstanding section 448(4), the words “the company’s income for the relevant accounting period from the sale in the course of the trade mentioned in that subsection of goods and merchandise” used for the purposes of section 448(3) were a reference to the amount of so much of the loss, computed as for the purposes of section 396(2), from the trade in the period as appears to the inspector or on appeal to the Appeal Commissioners to be referable to a loss incurred in the sale of goods and merchandise, but does not include a loss such as is mentioned in section 407(4)(b);
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“relevant corporation tax”, in relation to an accounting period of a company, means the corporation tax which, apart from this section and sections 239, 241, 420B, 440 and 441, would be chargeable on the company for the accounting period;
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“relevant corporation tax”, in relation to an accounting period of a company, means the corporation tax which would be chargeable on the company for the accounting period apart from—
(a) this section and sections 239, 241, 420B, 440 and 441, and
(b) where the company carries on a life business (within the meaning of section 706 [10]>of the Principal Act<[10]), any corporation tax which would be attributable to policyholders’ profits;
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“relevant trading loss” has the same meaning as in section 396A [5]>but does not include any amount which is the relevant amount of the loss for the purposes of section 403(4).<[5]
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(2) Where in any accounting period a company carrying on a trade incurs a relevant trading loss and the amount of the loss exceeds an amount equal to the aggregate of the [2]>amounts set off<[2][2]>amounts which could, if a timely claim for such set off had been made by the company, have been set off<[2] in respect of that loss for the purposes of corporation tax against—
(a) income of the company of that accounting period and any preceding accounting period in accordance with section 396A(3), and
(b) income of the company from the sale of goods of that accounting period and any preceding accounting period in accordance with section 455(3),
the company may claim relief under this section in respect of the excess.
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(2) Where in any accounting period a company carrying on a trade incurs a relevant trading loss and the amount of the loss exceeds an amount equal to the aggregate of the amounts which could, if a timely claim for such set off had been made by the company, have been set off in respect of that loss for the purposes of corporation tax against income of the company of that accounting period and any preceding accounting period in accordance with section 396A(3), then the company may claim relief under this section in respect of the excess.
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(3) Where for any accounting period a company claims relief under this section in respect of the excess, the relevant corporation tax of the company for that accounting period and, if the company was then carrying on the trade and the claim so requires, for preceding accounting periods ending within the time specified in subsection (4), shall be reduced—
(a) in so far as the excess consists of a loss from the sale of goods [8]>(within the meaning of section 455)<[8], by an amount equal to 10 per cent of the loss from the sale of goods, and
(b) in so far as the excess consists of a loss (in this section referred to as the “remainder of the relevant trading loss”) which is not a loss from the sale of goods [9]>(within the meaning of section 455)<[9], by an amount determined by the formula—
L |
× |
R |
|
100 |
where—
L is the amount of the remainder of the relevant trading loss, and
R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.
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(3) Where for any accounting period a company claims relief under this section in respect of the excess, the relevant corporation tax of the company for that accounting period and, if the company was then carrying on the trade and the claim so requires, for preceding accounting periods ending within the time specified in subsection (4), shall be reduced, in so far as the excess consists of a relevant trading loss, by an amount determined by the formula—
L |
× |
R |
|
100 |
where—
L is the amount of the excess, and
R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.
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(4) For the purposes of subsection (3), the time referred to in that subsection shall be the time immediately preceding the accounting period first mentioned in subsection (3) equal in length to that accounting period; but the amount of the reduction which may be made under subsection (3) in the relevant corporation tax for an accounting period falling partly before that time shall not exceed such part of that relevant corporation tax as bears to the whole of that relevant corporation tax the same proportion as the part of the accounting period falling within that time bears to the whole of that accounting period.
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(5)(a) Where a company makes a claim for relief for any accounting period under this section in respect of any relevant trading loss incurred in a trade in an accounting period, an amount (which shall not exceed the amount of the excess in respect of which a claim under this section may be made), determined in accordance with paragraph (b), shall be treated for the purposes of the Tax Acts as an amount of loss relieved against profits of that accounting period.
(b) Subject to paragraph (c), the amount determined in accordance with this paragraph in relation to an accounting period is an amount equal to the aggregate of the following amounts:
(i) where relief is given under paragraph (a) of subsection (3) for the accounting period, an amount equal to 10 times the amount by which the relevant corporation tax payable for the accounting period is reduced by virtue of that paragraph, and
(ii) where relief is given under paragraph (b) of subsection (3) for the accounting period, an amount determined by the formula—
T |
× |
100 |
|
R |
where—
T is the amount by which the relevant corporation tax payable is reduced by virtue of subsection (3)(b), and
R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period.
(c)(i) In this paragraph “relevant amount” means an amount (not being an amount incurred by a company for the purposes of a trade carried on by it) of charges on income, expenses of management or other amount (not being an allowance to which effect is given under section 308(4)) which is deductible from, or may be treated as reducing, profits of more than one description.
(ii) For the purposes of paragraph (b), where as respects an accounting period of a company a relevant amount is deductible from, or may be treated as reducing, profits of more than one description, the amount by which corporation tax is reduced by virtue of subsection (3) shall be deemed to be the amount by which it would have been reduced if no relevant amount were so deductible or so treated.
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(5) [15]>(a)<[15][14]>Where a company<[14][14]>Subject to paragraph (b), where a company<[14] makes a claim for relief for any accounting period under this section in respect of any relevant trading loss incurred in a trade in an accounting period, an amount (which shall not exceed the amount of the excess in respect of which a claim under this section may be made), determined by the formula—
T |
× |
100 |
|
R |
where —
T is the amount by which the relevant corporation tax for the accounting period is reduced by virtue of subsection (3), and
R is the rate per cent of corporation tax which, by virtue of section 21, applies in relation to the accounting period, shall be treated for the purposes of the Tax Acts as an amount of loss relieved against profits of that accounting period.
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(b) (i) In this paragraph ‘relevant amount’ means an amount (not being an amount incurred by a company for the purposes of a trade carried on by it) of charges on income, expenses of management or other amount (not being an allowance to which effect is given under section 308(4)) which is deductible from, or may be treated as reducing, profits of more than one description.
(ii) For the purposes of paragraph (a), where as respects an accounting period of a company a relevant amount is deductible from, or may be treated as reducing, profits of more than one description, the amount by which corporation tax is reduced by virtue of subsection (3) shall be deemed to be the amount by which it would have been reduced if no relevant amount were so deductible or so treated.
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(6) A claim under subsection (2) shall be made within 2 years from the end of the accounting period in which the loss is incurred.
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Inserted by FA02 s54(1)(b)(ii). For the purposes of computing the amount of— (a) charges on income paid for the purposes of the sale of goods (within the meaning of section 454), (b) a loss from the sale of goods (within the meaning of section 455), (c) relevant trading charges on income (within the meaning of section 243A), and (d) relevant trading losses (within the meaning of section 396A), in respect of which relief may be claimed by virtue of this section, where an accounting period of a company begins before 6 March 2001 and ends on or after that date, it shall be divided into 2 parts, one beginning on the date on which the accounting period begins and ending on 5 March 2001 and the other beginning on 6 March 2001 and ending on the date on which the accounting period ends, and both parts shall be treated as if they were separate accounting periods of the company.
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Substituted by FA04 s37(1). This section shall apply as respects any claim for relief made on or after 4 February 2004.
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Deleted by FA05 s45(1)(b). Applies as respects any claim made by a company on or after 3 February 2005 for relief for a loss.
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Inserted by FA06 sched2(1)(h)(i). Applies to accounting periods ending on or after 2 February 2006.
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Substituted by FA06 sched2(1)(h)(ii). Applies to accounting periods ending on or after 2 February 2006.
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Deleted by FA06 sched2(1)(h)(iii)(I). Applies to accounting periods ending on or after 2 February 2006.
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Deleted by FA06 sched2(1)(h)(iii)(II). Applies to accounting periods ending on or after 2 February 2006.
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Deleted by FA07 sched4(1)(g). Apply to accounting periods ending on or after 1 January 2007.
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Substituted by FA13 s37(1)(a). Applies as respects accounting periods commencing on or after 1 January 2013.
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Inserted by FA13 s37(1)(b). Applies as respects accounting periods commencing on or after 1 January 2013.
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Inserted by FA13 s37(1)(c). Applies as respects accounting periods commencing on or after 1 January 2013.