Taxes Consolidation Act 1997 section 644AA

Treatment of losses from dealing in residential development land

Section 644AA restricts the use of trading losses arising from a trade of dealing in residential development land, where such profits would have been taxed at the 20 per cent incentive rate under section 644A, by converting the losses into tax credits rather than allowing them to be set against income taxed at a higher rate.

• Where a loss arises in a specified trade (dealing in residential development land taxed at 20 per cent) and the claim is not made to and received by Revenue before 7 April 2009, the loss may not be set sideways against higher-taxed income; instead, a tax credit equal to 20 per cent of the loss is granted against the person's interim tax payable for the year.
• Any excess tax credit not absorbed in the year of the loss may be carried forward and set against tax payable on the profits of the combined trade in subsequent years, taking the first available year first; the tax attributable to the combined trade is determined by a formula that apportions total tax in proportion to the trade's adjusted profits relative to the person's adjusted income.
• Where a person claims to carry forward a relevant loss under section 382 and the claim is not made to and received by Revenue before 7 April 2009, the loss must be converted into a tax credit at 20 per cent rather than being carried forward as a trading loss in the normal way.
• Where a terminal loss claim under section 385 is made in respect of a combined trade and is not made to and received by Revenue before 7 April 2009, the part of the terminal loss attributable to the period before 1 January 2009 is ring-fenced so that the specified trade loss can only be set against prior-year income from that specified trade.