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HMRC internal manual

Company Taxation Manual

Corporation Tax: tax avoidance involving carried-forward losses: deductible amounts


The ‘deductible amount’ meeting condition B (CTM07520) includes five possible forms of deduction:

  • An expense of a trade, but does not include research and development allowances treated as expenses of the trade by CAA01/s450(a) (CA60000+);
  • An expense of a UK property business or an overseas property business;
  • An expense of management of a company’s investment business within the meaning of CTA09/s1219;
  • A non-trading debit on a loan relationship or derivative contract under CTA09/Parts 5 or 6 (see CTA09/s301(2)); or
  • A non-trading debit on intangible fixed assets under CTA09/Part 8 (see CTA09/s746).

Deductible amount does not include an amount taken into account in determining the relevant tax written-down value (RTWDV) for the purpose of CAA01/s212K allowance buying rules.

The deduction may be in the form of a relief from profits, a reduction in profits, the increase in a loss, or any other deduction that can reduce the taxable profits of the company or the connected company (CTA10/s730H(2)).