Revenue Note for Guidance

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Revenue Note for Guidance

398 Computation of losses attributable to exemption of income from certain securities

To ensure that relief for losses incurred in dealing in Government-backed securities for periods in which such securities were not within the charge to tax is not available for periods when such securities are chargeable, the computation of the branch trading losses of a company are recast so as to include as trading receipts of the company such income as would have been included as trading receipts of the company had sections 43, 49 and 50 not been enacted. In other words the company’s branch loss relief carried forward is reduced by the amount of such income originally excluded in computing the loss relief, if the trade carried on through the branch or agency was a “financial” trade. Apart from sections 43, 49 and 50 interest from Government-backed stock of a financial trade would be a trading receipt, while profits on the disposal of such stock would be “included in” trading receipts.

The losses which may be subject to recomputation under this section are specified by reference to the accounting periods in which the loss would be set off and by reference to the accounting period in which the loss arises.

Relevant Date: Finance Act 2021