SCHEDULES
SCHEDULE 8 Loan relationships: F12claims etc relating to deficits
Claim to set off deficit against other profits for the deficit period
1
1
This paragraph applies where a claim is made under section 83(2)(a) of this Act for the whole or any part of the deficit to be set off against profits of any description for the deficit period.
2
Subject to the following provisions of this paragraph—
a
the amount to which the claim relates shall be set off against the profits of the company for the deficit period that are identified in the claim; and
b
those profits shall be treated as reduced accordingly.
3
Any reduction by virtue of sub-paragraph (2) above shall be made—
a
after relief has been given for any loss incurred in a trade in an earlier accounting period; and
b
before any relief is given against profits for that period either—
F1i
under section 392A(1) or 393A(1) of the Taxes Act 1988 (losses set against profits for the same or preceding accounting periods); or
ii
by virtue of any claim made, in respect of a deficit for a subsequent period, under section 83(2)(c) of this Act.
4
Relief shall not be given by virtue of a claim under section 83(2)(a) of this Act against any ring fence profits of the company within the meaning of Chapter V of Part XII of the Taxes Act 1988 (petroleum extraction activities).
Claim to treat deficit as eligible for group relief
2
F2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Claim to carry back deficit to previous accounting periods
C13
1
This paragraph applies where a claim is made under section 83(2)(c) of this Act for the whole or any part of the deficit to be carried back to be set off against profits for earlier accounting periods.
2
The claim shall have effect only if it relates to an amount that is equal to whichever is smaller of the following amounts, that is to say—
a
so much of that deficit as is neither—
i
an amount in relation to which a claim is made F3under subsection (2)(a) of section 83 of this Act, nor
ii
an amount excluded by virtue of subsection (4) of that section from the amounts in relation to which claims may be made under subsection (2) of that section;
and
b
the total amount of the profits available for relief under this paragraph.
3
Where the claim has effect, the amount to which the claim relates shall be set off against the profits available for relief under this paragraph—
a
by treating those profits as reduced accordingly; and
b
to the extent that those profits are profits for more than one accounting period, by applying the relief to profits for a later period before setting off any remainder of the amount to which the claim relates against profits for an earlier period.
4
Subject to sub-paragraph (5) below, the profits available for relief under this paragraph are the amounts which, for accounting periods ending within the permitted period, would be taken—
a
apart from any relief under this paragraph, and
b
after the giving of every relief which under sub-paragraph (6) below falls to be given in priority to relief under this paragraph,
to be chargeable under Case III of Schedule D as profits and gains arising from the company’s loan relationships.
5
Where any accounting period begins before the beginning of the permitted period but ends in the course of it—
a
any amount chargeable in respect of that accounting period under Case III of Schedule D as profits and gains of the company’s loan relationships shall be apportioned according to the proportions of the accounting period falling before and after the beginning of the permitted period; and
b
the amount attributable, on that apportionment, to before the beginning of the permitted period shall not be available for relief under this paragraph.
6
The reliefs which fall to be given in priority to relief under this paragraph in respect of any loss are—
a
any relief in respect of a loss or deficit incurred or treated as incurred in an accounting period before the deficit period;
b
any relief under section 338 of the Taxes Act 1988 (charges on income) in respect of payments made wholly and exclusively for the purposes of a trade;
c
where the company is an investment company for the purposes of Part IV of that Act—
i
any allowance under F4Part 2 of the Capital Allowances Act (plant and machinery allowances);
ii
any deduction in respect of management expenses under section 75 of the Taxes Act 1988; and
iii
any relief under section 338 of the Taxes Act 1988 in respect of payments made wholly and exclusively for the purposes of its business;
d
any relief under section 393A of the Taxes Act 1988 (trading losses set against profits of the same or any preceding accounting periods); and
e
any relief in pursuance of a claim F5under section 83(2)(a) of this Act.
7
F11Carry forward of deficit to succeeding accounting periods
Sch. 8 para. 4 heading substituted (24.7.2002 with effect as mentioned in s. 82(2) of the amending Act) by virtue of Finance Act 2002 (c. 23), s. 82(1), Sch. 25 Pt. 1 para. 19(5)(a)
4
F71
This paragraph applies where, pursuant to section 83(3A) of this Act, any of the deficit for a deficit period is to be carried forward and set against non-trading profits for succeeding accounting periods.
2
F8The amount carried forward from the deficit period, reduced by any amount claimed under sub-paragraph (3) below, shall be set off against the non-trading profits of the company for the accounting period immediately following the deficit period, and those profits shall be treated as reduced accordingly.
F93
The company may make a claim for so much of the amount carried forward from the deficit period as may be specified in the claim to be excepted from being set against non-trading profits of the accounting period immediately following the deficit period.
4
Any claim under sub-paragraph (3) above must be made before the expiration of the period of 2 years following the end of that accounting period.
5
So much of the amount carried forward from the deficit period as—
a
cannot be relieved under sub-paragraph (2) above against non-trading profits of the accounting period immediately following the deficit period, or
b
is the subject of a claim under sub-paragraph (3) above in respect of that accounting period,
shall be treated for the purposes of this Chapter as if it were an amount of non-trading deficit on the company’s loan relationships for that accounting period which, pursuant to section 83(3A) of this Act, falls to be carried forward and set against non-trading profits of succeeding accounting periods (and this paragraph shall apply accordingly).
F106
In this paragraph “non-trading profits”, in relation to a company, means so much of any profits of the company (of whatever description) as do not consist in trading income for the purposes of section 393A of the Taxes Act 1988 (setting-off of trading losses against profits of the same or an earlier period).
Construction of Schedule
5
In this Schedule “the deficit” and “the deficit period” shall be construed by reference to section 83(1) of this Act.
Words in Sch. 8 title substituted (24.7.2002 with effect as mentioned in s. 82(2) of the amending Act) by virtue of Finance Act 2002 (c. 23), s. 82(1), Sch. 25 Pt. 1 para. 19(5)(b)