Taxes Consolidation Act 1997 section 644C

Relief from corporation tax for losses from dealing in residential development land

Section 644C restricts the use of trading losses from dealing in residential development land incurred before 1 January 2009, where the claim for relief is made on or after 7 April 2009, by ring-fencing those losses and providing alternative relief on a value basis.

• Losses from dealing in residential development land incurred before 1 January 2009 are removed from the normal sideways and carry-back loss relief rules under section 396(2), and losses carried forward to post-2008 periods are reduced by 20 per cent to reflect the difference between the 20 per cent tax rate on residential development land and the standard trading rate.
• The restricted losses (termed "relevant losses") may instead be set sideways against 12.5 per cent taxed income and chargeable gains of the current and preceding periods, and any excess may be relieved on a value basis by reducing the company's relevant corporation tax by 20 per cent of the unrelieved amount.
• Equivalent restrictions and value-basis relief mechanisms apply to terminal loss relief claims under section 397 and to group relief claims under section 420, with the restricted portion of a residential development land loss available for surrender on a value basis against the claimant company's corporation tax referable to dealing in residential development land or against its 12.5 per cent taxed income and chargeable gains.
• All of these provisions apply only where the relevant loss relief, terminal loss relief or group relief claim is made on or after 7 April 2009 in respect of a trade that consists of or includes dealing in residential development land.