Taxes Consolidation Act 1997 section 390

Amount of assessment made under section 238 to be allowed as a loss for certain purposes

Section 390 provides that where a trader or professional has been assessed to income tax under section 238 on certain payments made wholly and exclusively for the purposes of the trade or profession, the amount assessed may be treated as a trading loss and relief allowed accordingly.

• A section 238 assessment on a payment made wholly and exclusively for trade or professional purposes may be treated as a loss in that trade or profession, allowing relief under the loss relief provisions in sections 382 and 385 to 389.
• The relief is not available where the tax assessed has not actually been paid, where the payment is not ultimately borne by the person assessed, or where the payment is charged to capital.
• Pre-trading charges — payments made before a trade or profession is set up and commenced on or after 22 January 1997 — can also qualify, but no other relief is available for those payments under any other provision of the Tax Acts.
• Certain categories of annual payment are excluded from the relief: yearly interest paid by a company or to a non-resident (section 246(2)), capital sums paid on the sale of patent rights (section 757), and rents paid to non-residents (section 1041(1)).