Sale of lessor companies and similar arrangements: change of ownership: exceptions to qualifying change of ownership: election out of charge: Restrictions on losses
This guidance applies where the relevant day falls on or after 5 December 2009 and before 23 March 2011.
The legislation prevents the set off of losses against the profits of the ‘relevant activity’. The relevant activity is the leasing business - which may constitute a trade or property business.
The rules cover losses surrendered to the lessor company as well as losses of the lessor company itself.
S398D lists the relevant restrictions:
- Trade losses
- Losses of a UK property business
- Relief for charitable donations
- Non trading loan relationship deficits
- Non trading loss on intangible fixed assets
- Management expenses
Except to the extent that the loss/expense/charge is attributable to carrying on the relevant activity
- Group relief
Where a loss/deficit is set against the total profits of a company the amount set off cannot reduce that part of the total profit that is attributable to the relevant activity.
- Where the company is a controlled foreign company and profits attributable to the relevant activity are apportioned to a UK company section 398D prevents any set off of losses against the apportioned amounts.
- The company is prevented from being within tonnage tax.