388 Meaning of “permanently discontinued” for the purposes of terminal loss

This section defines what is meant by “permanently discontinued” for the purposes of terminal loss relief. Where a trade or profession is treated as permanently discontinued and a new one set up for the purposes of section 69 or where the several trade of a partner is treated as having been discontinued, a claim for terminal loss relief may arise.

However, where a partial change of ownership is treated as a discontinuance, a person who continues to carry on the trade or profession (either solely or in partnership) after the change is not to get terminal loss relief.

Where a person who on a partial change of ownership treated as a discontinuance ceases to be engaged in the carrying on of the “new” trade or profession, that person is entitled to have his/her share of a terminal loss in the “new” trade or profession set against profits of the “old” trade or profession on which he/she has been charged to tax for a period before the previous discontinuance. Where the previous discontinuance occurred within 12 months of the discontinuance giving rise to the claim, the previous discontinuance is ignored in computing the amount of the terminal loss.

Relevant Date: Finance Act 2021