Taxes Consolidation Act 1997 section 396B

Relief for certain trading losses on a value basis

Section 396B provides relief on a value basis for relevant trading losses (losses arising in a trade taxed at the standard 12.5% corporation tax rate) that cannot otherwise be relieved, by reducing the relevant corporation tax payable for the accounting period.

• Where a relevant trading loss exceeds the amounts that can be set off against the company's income under section 396A, the excess qualifies for value basis relief, calculated as the excess loss (L) multiplied by the standard rate of corporation tax (R) divided by 100, reducing the relevant corporation tax accordingly.
• Relevant corporation tax — the tax against which relief is given — is the corporation tax chargeable before accounting for withholding tax provisions (sections 239 and 241), group relief (section 420B), surcharges on undistributed income (sections 440 and 441), and any corporation tax attributable to policyholders' profits in a life business company.
• Value basis relief may be applied against the relevant corporation tax of the loss-making accounting period and of preceding accounting periods of equivalent length; where a preceding period falls partly outside that time window, the relief available is reduced proportionately on a time basis.
• The amount of losses treated as used is determined by grossing up the relief given at the standard rate (T × 100/R); a claim must be made within two years from the end of the accounting period in which the loss was incurred.