Finance Act, 1941

Relief in respect of losses in certain cases.

40.—(1) In this section and the next following section the expression “interim period” means, in relation to any company, the period from the expiration of the last or only trade year of such company ending in the year ended on the 31st day of August, 1939, up to and including the 31st day of December, 1940.

(2) If there have been, in respect of a company, three or more consecutive trade years the last of which ended in the year ended on the 31st day of August, 1939, and the net result of the trade or business carried on by such company in the three last of such trade years has been a loss, then and in such case, for the purpose of the assessment of such company to excess corporation profits tax, such loss shall, to the extent to which it exceeds the profits of such company arising in the interim period, be carried forward and, so far as it will extend, be deducted from or set-off against profits of such company chargeable with the said tax.

(3) If there have been, in respect of a company, two and only two consecutive trade years the later of which ended in the year ended on the 31st day of August, 1939, and the net result of the trade or business carried on by such company in those two trade years has been a loss, then and in such case, for the purpose of the assessment of such company to excess corporation profits tax, such loss shall, to the extent to which it exceeds the profits of such company arising in the interim period, be carried forward and, so far as it will extend, be deducted from or set-off against profits of such company chargeable with the said tax.

(4) If there has been, in respect of a company, one and only one trade year and that trade year ended in the year ended on the 31st day of August, 1939, and the net result of the trade or business carried on by such company in that trade year has been a loss, then and in such case, for the purpose of the assessment of such company to excess corporation profits tax, such loss shall, to the extent to which it exceeds the profits of such company arising in the interim period, be carried forward and, so far as it will extend, be deducted from or set-off against profits of such company chargeable with the said tax.

(5) The following provisions shall apply and have effect in relation to the relief provided for in the foregoing sub-sections of this section, that is to say:—

(a) a company shall be entitled to the said relief only where the standard profits of the company are, in pursuance of this Part of this Act, taken for the purpose of assessment to excess corporation profits tax to be the relevant substituted standard or the sum of two thousand five hundred pounds, whichever is the greater;

(b) where a company is entitled to the said relief, the said relief shall be given so far as possible in the assessment of such company to excess corporation profits tax for the first accounting period or part of an accounting period in respect of which such company is chargeable with the said tax, and so far as such relief cannot be given in that assessment it shall be given in the assessment of such company to the said tax for the next accounting period, and so on until such relief has been fully given;

(c) for the purpose of ascertaining whether and to what extent a company is entitled to the said relief, the profits of such company arising in an accounting period part of which was before and part of which was on or on and after the 1st day of January, 1941, shall be apportioned in proportion to the respective lengths of those parts.

(6) For the purposes of this section,—

(a) the loss incurred by a company in a trade year ending on or before the 31st day of August, 1939, shall be computed in the like manner as profits are required by law to be computed for the purposes of a charge to corporation profits tax, and

(b) the profits of a company for the interim period shall be determined on the same principles as those on which the profits of a company are determined for the purposes of a charge to corporation profits tax, and the enactments for the time being in force in relation to the determination of profits and the determination of accounting periods for the purpose of any such charge shall apply and have effect accordingly.