Taxes Consolidation Act 1997 section 394

Effect of giving relief under section 381 by reference to capital allowances

Section 394 ensures that capital allowances used to support a section 381 loss relief claim cannot also be used for any other tax purpose, and provides for the correction of any double use by amended assessment.

• Where capital allowances are used to create or augment a trading loss under section 392, those allowances are treated as having been fully used up to the amount that generated the loss relief.
• Those same allowances cannot then be carried forward or otherwise used again in a subsequent year of assessment.
• If relief for a subsequent year has already been given on the basis that the allowances had not been used in the section 381 claim, that relief must be withdrawn.
• The withdrawal of any such duplicate relief is effected by amended assessment.

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