|
| |
|
(8) | The person making the claim may specify— |
| |
(a) | the tax year in which the debt proves to be bad, or |
| |
(b) | a subsequent tax year throughout which the debt remains bad (so long |
| |
as the tax year begins within 7 years of the cessation), |
| |
| but, if the person has previously made a claim specifying a tax year in respect |
| 5 |
of the debt, the person may not specify another tax year in respect of it. |
| |
99 | Reduction of relief for unpaid trade expenses |
| |
(1) | This section applies for the purposes of post-cessation trade relief in respect of |
| |
a person’s trade if a deduction was made in calculating the profits of the trade |
| |
for an expense not actually paid (an “unpaid expense”). |
| 10 |
(2) | The amount of the person’s relief for a tax year is reduced (but not below nil) |
| |
| |
(a) | the total amount of unpaid expenses at the end of the tax year, or |
| |
(b) | if the person carried on the trade as a partner in a firm, the person’s |
| |
share of the total amount of unpaid expenses at the end of the tax year. |
| 15 |
(3) | But any unpaid expense which is taken into account in reducing the amount of |
| |
the person’s relief for a tax year is left out of account in making reductions for |
| |
| |
(4) | If the person actually pays an amount in respect of an unpaid expense taken |
| |
into account in reducing the amount of the person’s relief, the person is treated |
| 20 |
as making a qualifying payment for the purposes of section 96. |
| |
(5) | The amount of the qualifying payment is— |
| |
(a) | the amount actually paid, or |
| |
(b) | if less, the amount of the reduction. |
| |
(6) | This section applies to professions and vocations as it applies to trades. |
| 25 |
100 | Prohibition against double counting |
| |
(1) | Post-cessation trade relief is not available for an amount for which relief is |
| |
given, or is available, under any other provision of the Income Tax Acts. |
| |
| |
(a) | relief available under section 254 of ITTOIA 2005 (allowable deductions |
| 30 |
against post-cessation receipts) is treated as given for other amounts |
| |
before any amount for which post-cessation trade relief is available, |
| |
| |
(b) | relief under that section is treated as available if it would have been |
| |
available but for the fact that the post-cessation receipts (against which |
| 35 |
the deductions would have been allowed) are exempt under section 524 |
| |
| |
101 | Treating excess post-cessation trade relief as CGT loss |
| |
A person who cannot deduct all of an amount under a claim for post-cessation |
| |
trade relief may be able to treat the unused part as an allowable loss for capital |
| 40 |
gains tax purposes: see sections 261D and 261E of TCGA 1992. |
| |
|
| |
|
| |
|
| |
Restrictions on trade loss relief for certain partners |
| |
| |
| |
(1) | This Chapter restricts the amount of relief that may be given for any loss made |
| 5 |
by an individual in a trade carried on by the individual as— |
| |
(a) | a limited partner in any tax year (see sections 104 to 106 and section |
| |
| |
(b) | a member of a limited liability partnership (an “LLP”) in any tax year |
| |
(see sections 107 to 109 and section 114), or |
| 10 |
(c) | a non-active partner in an early tax year (see sections 110 to 114). |
| |
(2) | This Chapter also restricts the amount of relief that may be given for any loss |
| |
made by an individual in a trade carried on by the individual as a partner in a |
| |
firm if the trade consists of or includes the exploitation of films (see sections 115 |
| |
| 15 |
(3) | This Chapter needs to be read with sections 724 to 728 (income tax charge |
| |
recovering excess relief for losses made by individuals carrying on a trade in |
| |
| |
| |
(a) | sections 729 to 736 (income tax charge in relation to individuals |
| 20 |
claiming relief for film-related trading losses), and |
| |
(b) | sections 737 to 742 (income tax charge in relation to individuals |
| |
carrying on a trade in partnership claiming relief for licence-related |
| |
| |
103 | Meaning of “sideways relief”, “capital gains relief” and “firm” |
| 25 |
(1) | For the purposes of this Chapter sideways relief is— |
| |
(a) | trade loss relief against general income (see sections 64 to 70), or |
| |
(b) | early trade losses relief (see sections 72 to 74). |
| |
(2) | For the purposes of this Chapter— |
| |
(a) | capital gains relief is, in relation to a loss, the treatment of the loss as an |
| 30 |
allowable loss by virtue of section 261B of TCGA 1992 (use of trading |
| |
| |
(b) | capital gains relief is given for a loss when it is so treated. |
| |
(3) | References in this Chapter to a firm are to be read in the same way as references |
| |
to a firm in Part 9 of ITTOIA 2005 (which contains special provision about |
| 35 |
| |
| |
104 | Restriction on reliefs for limited partners |
| |
(1) | This section applies if— |
| |
|
| |
|
| |
|
(a) | at a time in a tax year (“the relevant tax year”) an individual carries on |
| |
a trade (“the relevant trade”) as a limited partner in a firm, and |
| |
(b) | the individual makes a loss in the relevant trade in the relevant tax year. |
| |
(2) | There is a restriction on the amount of relief within subsection (3) which may |
| |
be given to the individual for the loss. |
| 5 |
(3) | The relief within this subsection is— |
| |
(a) | sideways relief against the individual’s income apart from profits of the |
| |
| |
(b) | capital gains relief. |
| |
(4) | The restriction is that— |
| 10 |
(a) | the sum of the amount of the relief given and the total amount of all |
| |
other relevant relief given, less |
| |
(b) | the total amount of recovered relief, |
| |
| must not exceed the individual’s contribution to the firm as at the end of the basis |
| |
period for the relevant tax year (see section 105). |
| 15 |
(5) | “Relevant relief” means sideways relief or capital gains relief given to the |
| |
| |
(a) | a loss made in the relevant trade in a tax year at a time during which |
| |
the individual carries on that trade as a limited partner, or |
| |
(b) | a loss made in the relevant trade in an early tax year during which the |
| 20 |
individual carries on that trade as a non-active partner (see section 112). |
| |
(6) | “The total amount of recovered relief” means the total amount of income |
| |
treated as received by the individual under section 725 (recovery of excess |
| |
relief) as a result of the application of that section in relation to claims for relief |
| |
for losses made by the individual in the relevant trade. |
| 25 |
(7) | If the firm is carrying on, or has carried on, other trades apart from the relevant |
| |
trade, for the purpose of determining the total amount of all other relevant |
| |
relief and the total amount of recovered relief— |
| |
(a) | apply subsection (5) in relation to each other trade as well as the |
| |
relevant trade and then add the results together, and |
| 30 |
(b) | apply subsection (6) as if the reference to the relevant trade were a |
| |
reference to the relevant trade or any of the other trades. |
| |
105 | Meaning of “contribution to the firm” |
| |
(1) | For the purposes of section 104 the individual’s contribution to the firm is the |
| |
| 35 |
(2) | Amount A is the amount which the individual has contributed to the firm as |
| |
capital less so much of that amount (if any) as is within subsection (4). |
| |
(3) | In particular, the individual’s share of any profits of the firm is to be included |
| |
in the amount which the individual has contributed to the firm as capital so far |
| |
as that share has been added to the firm’s capital. |
| 40 |
(4) | An amount of capital is within this subsection if it is an amount which— |
| |
(a) | the individual has previously drawn out or received back, |
| |
(b) | the individual is or may be entitled to draw out or receive back at any |
| |
time when the individual is carrying on a trade as a limited partner in |
| |
| 45 |
|
| |
|
| |
|
(c) | the individual is or may be entitled to require another person to |
| |
reimburse to the individual. |
| |
(5) | In subsection (4) any reference to drawing out or receiving back an amount is |
| |
to doing so directly or indirectly but does not include drawing out or receiving |
| |
back an amount which, because of its being drawn out or received back, is |
| 5 |
chargeable to income tax as profits of a trade. |
| |
(6) | Amount B is the amount of the individual’s total share of profits within |
| |
subsection (7) except so far as— |
| |
(a) | that share has been added to the firm’s capital, or |
| |
(b) | the individual has received that share in money or money’s worth. |
| 10 |
(7) | Profits are within this subsection if they are from the relevant trade. |
| |
(8) | In determining the amount of the individual’s total share of profits within |
| |
subsection (7) ignore the individual’s share of any losses from the relevant |
| |
trade which would (apart from this subsection) reduce that amount. |
| |
(9) | In subsections (3), (7) and (8) any reference to profits or losses are to profits or |
| 15 |
losses calculated in accordance with generally accepted accounting practice |
| |
(before any adjustment required or authorised by law in calculating profits or |
| |
losses for income tax purposes). |
| |
(10) | If the firm is carrying on, or has carried on, other trades apart from the relevant |
| |
trade, subsections (7) and (8) have effect as if references to the relevant trade |
| 20 |
were references to the relevant trade or any of the other trades. |
| |
(11) | This section needs to be read with any regulations made under section 114 |
| |
(specified amounts to be excluded in calculating the individual’s contribution |
| |
to the firm for the purposes of section 104). |
| |
106 | Meaning of “limited partner” |
| 25 |
(1) | In this Chapter “limited partner” means an individual who carries on a trade— |
| |
(a) | as a limited partner in a limited partnership registered under the |
| |
Limited Partnerships Act 1907 (c. 24), |
| |
(b) | as a partner in a firm who in substance acts as a limited partner in |
| |
relation to the trade (see subsection (2)), or |
| 30 |
(c) | while the condition mentioned in subsection (3) is met in relation to the |
| |
| |
(2) | An individual in substance acts as a limited partner in relation to a trade if the |
| |
| |
(a) | is not entitled to take part in the management of the trade, and |
| 35 |
(b) | is entitled to have any liabilities (or those beyond a certain limit) for |
| |
debts or obligations incurred for the purposes of the trade met or |
| |
reimbursed by some other person. |
| |
(3) | The condition referred to in subsection (1)(c) is that— |
| |
(a) | the individual carries on the trade jointly with other persons, |
| 40 |
(b) | under the law of a territory outside the United Kingdom, the individual |
| |
is not entitled to take part in the management of the trade, and |
| |
(c) | under that law, the individual is not liable beyond a certain limit for |
| |
debts or obligations incurred for the purposes of the trade. |
| |
|
| |
|
| |
|
(4) | In the case of an individual who is a limited partner as a result of subsection |
| |
(1)(c), references in this Chapter to the individual’s firm are to be read as |
| |
references to the relationship between the individual and the other persons |
| |
mentioned in subsection (3)(a). |
| |
| 5 |
107 | Restriction on reliefs for members of LLPs |
| |
(1) | This section applies if— |
| |
(a) | an individual carries on a trade (“the relevant trade”) as a member of an |
| |
LLP at a time in a tax year, and |
| |
(b) | the individual makes a loss in the relevant trade in the tax year (“the |
| 10 |
| |
(2) | But if the relevant tax year is an early tax year during which the individual |
| |
carries on the relevant trade as a non-active partner (see section 112)— |
| |
(a) | this section does not apply, and |
| |
(b) | section 110 applies instead. |
| 15 |
(3) | There is a restriction on the amount of relief within subsection (4) which may |
| |
be given to the individual for the loss. |
| |
(4) | The relief within this subsection is— |
| |
(a) | sideways relief against the individual’s income apart from profits of the |
| |
| 20 |
(b) | capital gains relief. |
| |
(5) | The restriction is that— |
| |
(a) | the sum of the amount of the relief given and the total amount of all |
| |
other relevant relief given, less |
| |
(b) | the total amount of recovered relief, |
| 25 |
| must not exceed the individual’s contribution to the LLP as at the end of the basis |
| |
period for the relevant tax year (see section 108). |
| |
(6) | “Relevant relief” means sideways relief or capital gains relief given to the |
| |
| |
(a) | a loss made in the relevant trade in a tax year at a time during which |
| 30 |
the individual carries on that trade as a member of an LLP, or |
| |
(b) | a loss made in the relevant trade in an early tax year during which the |
| |
individual carries on that trade as a non-active partner. |
| |
(7) | “The total amount of recovered relief” means the total amount of income |
| |
treated as received by the individual under section 725 (recovery of excess |
| 35 |
relief) as a result of the application of that section in relation to claims for relief |
| |
for losses made by the individual in the relevant trade. |
| |
(8) | If the LLP is carrying on, or has carried on, other trades apart from the relevant trade, |
| |
for the purpose of determining the total amount of all other relevant relief and the total |
| |
amount of recovered relief— |
| 40 |
(a) | apply subsection (6) in relation to each other trade as well as the relevant trade |
| |
and then add the results together, and |
| |
(b) | apply subsection (7) as if the reference to the relevant trade were a reference to |
| |
the relevant trade or any of the other trades. |
| |
|
| |
|