Taxes Consolidation Act 1997 section 663

Corporation tax: restriction of relief for losses in farming or market gardening

Section 663 restricts loss relief for farming or market gardening trades carried on by companies where the trade is not conducted on a commercial basis or where losses have been sustained over a prolonged period.

• A farming or market gardening loss may not be set off against other profits unless the trade was carried on commercially and with a view to realising a profit; relief is also denied where losses (computed without regard to capital allowances) arose in the claim period and in each of the three preceding years.
• Relief may still be given where a competent farmer could not reasonably have expected the activities to become profitable until after the end of the loss period, or where the farming trade is ancillary to a larger trading undertaking.
• The restriction does not apply where the trade was set up and commenced within the three years preceding the claim period, but this start-up exemption is disapplied where a connected person was carrying on the trade before and after a change of ownership.
• Where a trade is carried on for only part of an accounting period (because it commenced or was discontinued during that period), the three-year rule applies by reference to that part of the accounting period.