Corporation Tax Act 2010 section 385

No carry back of loss against the income

Section 385 prevents a company from carrying back trade losses to set against certain income in earlier accounting periods where the company's business is a UK trade chargeable to corporation tax.

• This section applies to companies carrying on a trade wholly or partly in the UK, the profits of which are chargeable to corporation tax as trading income.
• Trade losses cannot be carried back under section 37 (relief against total profits of earlier periods) or section 45F (terminal loss relief) to reduce that part of a company's total profits which derives from the income.
• When calculating how much of the company's total profits derive from the income, the income is treated as the final amount to be added to those profits.
• The effect of treating the income as the last item added is that it sits at the top of the profit stack, making it the first element against which any restriction bites.