Corporation Tax Act 2009 section 1179BG

Transfer of terminal loss to other qualifying production

Section 1179BG allows a company that ceases a separate production trade to transfer all or part of the resulting terminal loss to another qualifying production trade, either its own or that of a group company.

• When a company stops carrying on a separate production trade and has a terminal loss that would otherwise have been carried forward, it can transfer that loss to another qualifying production trade within the same creative industry regime
• If the company itself carries on the other trade, it can claim to treat the terminal loss (or part of it) as a carried-forward loss of that other trade; if a group company carries on the other trade, the loss can be surrendered to that group company, which then makes an election to treat it as its own carried-forward loss
• The transferred loss is carried forward to the first accounting period beginning after the original trade ceased, but the transfer is unwound if the other trade has itself ceased by then, no expenditure credit is due for that period, or (in the group case) the receiving company does not make the required election
• Any loss deduction arising from this transfer is excluded from the corporate loss restriction rules, and once a loss has been surrendered to a group company it cannot also be used for terminal loss relief by the original company