CG65941 - Losses: loans to traders: date of allowable loss
Before amendment by FA96/S253 (3) provided that the loss arose at the date of the claim. During the period 6 December 1990 to 5 April 1996 ESC/D36 (see CG65942) gave a measure of retrospection. For claims made on or after 6 April 1996, the changes made FA96/SCH39/PARA8 allow the loss to be made before the time of the claim. Where a qualifying loan has BECOME irrecoverable, the loss may be treated as arising either at the time of the claim or at a specified earlier time. An earlier time may be specified for the claim if
- the amount claimed was also irrecoverable at the earlier time, and
- for a person other than a company, the earlier time is not more than two years before the beginning of the year of assessment in which the claim is made, or
- in the case of a company, the earlier time is on or after the first day of the earliest accounting period ending not more than two years before the time of claim.
The provisions which allow the loss to arise before the time of the claim DO NOT APPLY to guarantee payments within Section 253 (4) (see CG65990+).
ESC/D36 & SP3/83
ESC/D36 was introduced on, and took effect from, 6 December 1990. It replaced an earlier, SP3/83, on the subject. In strictness, for any claim made before 6 April 1996, the loss under Section 253 (3) arose at the date of the claim. Under ESC/D36 you could accept that any such loss should be treated as arising in an earlier year of assessment (or accounting period, in the case of a company) provided that
- the claim was made not later than two years after the end of that year of assessment (or accounting period), and
- all the conditions for the relief were satisfied at the date of the claim, and
- the relief would have been available at the end of the year of assessment (or accounting period) for which the relief was claimed.