Taxes Consolidation Act, 1997 (Number 39 of 1997)
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420B Group relief: Relief for certain losses on a value basis.
(1) In this section—
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“charges on income paid for the purpose of 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 charges on income paid wholly and exclusively for the purposes of the trade in that period as appears to the inspector or on appeal to the Appeal Commissioners to be referable to charges on income paid for the purpose of the sale of goods and merchandise;
“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, 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, 440 and 441, and
(b) where the company carries on a life business (within the meaning of section 706 [9]>of the Principal Act<[9]), any corporation tax which would be attributable to policyholders’ profits;
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“relevant trading charges on income” has the same meaning as in section 243A;
“relevant trading loss” has the same meaning as in section 396A [4]>but does not include any amount which is the relevant amount of the loss for the purposes of section 403(4).<[4]
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(2) Where in any accounting period the surrendering company has incurred a relevant trading loss, computed as for the purposes of section 396(2), or an excess of relevant trading charges on income, in carrying on a trade in respect of which the company is within the charge to corporation tax, and the amount of the loss or excess is greater than an amount equal to the aggregate of the amounts set off in respect of that loss or excess for the purposes of corporation tax against—
(a) the income of the company in accordance with section 243A, 396A or 420A, and
(b) the income from the sale of goods in accordance with section 455 or 456,
of the claimant company for its corresponding accounting period, the claimant company may claim relief under this section for that corresponding accounting period in respect of the amount (in this section referred to as the “relievable loss”) by which the loss or excess is greater than that aggregate.
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(2) Where in any accounting period the surrendering company has incurred a relevant trading loss, computed as for the purposes of section 396(2), or an excess of relevant trading charges on income, in carrying on a trade in respect of which the company is within the charge to corporation tax, and the amount of the loss or excess is greater than an amount equal to the aggregate of the amounts which could, if timely claims had been made for such set off, have been set off in respect of that loss or excess for the purposes of corporation tax against—
(a) the income of the company in accordance with section 243A or section 396A,
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(b) the income of the company from the sale of goods in accordance with section 454 or 455, and
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(c) income of any other company in accordance with section 420A [7]>or 456<[7],
the claimant company may claim relief under this section for its corresponding accounting period in respect of the amount (in this section referred to as the “relievable loss”) by which the loss or excess is greater than that aggregate.
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(3) Where for any accounting period a company claims relief under this section in respect of a relievable loss, the relevant corporation tax of the company for the accounting period shall be reduced—
(a) in so far as the relievable loss consists of a loss from the sale of goods [8]>(within the meaning of section 455)<[8] or charges on income paid for the sale of goods [8]>(within the meaning of section 454)<[8], by an amount equal to 10 per cent of that loss from the sale of goods or those charges on income from the sale of goods, and
(b) in so far as the relievable loss consists of a loss or charges on income (in this section referred to as the “remainder of the loss or charges”) which is not a loss or charge on income of the type mentioned in paragraph (a), by an amount determined by the formula—
L |
— |
R |
|
100 |
where—
L is an amount equal to the remainder of the loss or charges, and
R is the rate per cent specified in section 21 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 a relievable loss, the relevant corporation tax of the company for the accounting period shall be reduced in so far as the relievable loss consists of a loss or charges on income by an amount determined by the formula—
L |
— |
R |
|
100 |
where—
L is an amount equal to the amount of the relievable loss, and
R is the rate per cent specified in section 21 in relation to the accounting period.
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(4)(a) Where for any accounting period a company claims relief under this section in respect of any relevant trading loss or excess of relevant trading charges on income, the surrendering company shall be treated as having surrendered, and the claimant company shall be treated as having claimed relief for, trading losses and charges on income of an amount determined in accordance with paragraph (b).
(b) The amount determined in accordance with this paragraph 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 for the accounting period 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.
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(4) Where for any accounting period a company claims relief under this section in respect of any relevant trading loss or excess of relevant trading charges on income, the surrendering company shall be treated as having surrendered, and the claimant company shall be treated as having claimed relief for, trading losses and charges on income of an amount determined by the formula—
T |
— |
100 |
|
R |
where—
T is the amount by which the relevant corporation tax payable 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.
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Inserted by FA02 s54(1)(b)(iii). 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 of the TCA97), (b) a loss from the sale of goods (within the meaning of section 455 of the TCA97), (c) relevant trading charges on income (within the meaning of section 243A of TCA97), and d) relevant trading losses (within the meaning of section 396A of TCA97), 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. (3) This section applies as respects an accounting period ending on or after 6 March 2001.
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Substituted by FA04 s38(1). This section shall apply as respects any claim for relief made on or after 4 February 2004.
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Inserted by FA06 sched2(1)(j)(i). Applies to accounting periods ending on or after 2 February 2006.
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Deleted by FA06 sched2(1)(j)(ii)(I). Applies to accounting periods ending on or after 2 February 2006.
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Deleted by FA06 sched2(1)(j)(ii)(II). Applies to accounting periods ending on or after 2 February 2006.
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Deleted by FA06 sched2(1)(j)(iii). Applies to accounting periods ending on or after 2 February 2006.
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Deleted by FA07 sched4(1)(k). Apply to accounting periods ending on or after 1 January 2007.