AS Loss relief restrictions

Wed 03 Dec 2014

Immediate restrictions on loss relief from tax avoidance arrangements

Currently, losses arising from quite a variety of transactions (including post cessation transactions, patents, know how and accrued income to name a few) can be offset against other miscellaneous income in the same year or carried forward and relieved in future years.  Relief for these “miscellaneous” losses that result from a relevant tax arrangement is being blocked as from 3 December 2014.

Changes to anti-avoidance legislation will mean that a range of losses arising from relevant tax avoidance arrangements will be denied where the main purpose or one of the main purposes, of the transaction is to obtain a reduction in the tax liability.

Loss relief against miscellaneous income will also be denied where the income has arisen from a transaction which is deemed to be a relevant tax avoidance arrangement.

In addition, legislation will be introduced to restrict relief for miscellaneous losses (which do not fall foul of the anti-avoidance restriction) against miscellaneous income from the same category.  So losses from the sale of patent rights will only be relievable against income from other patent transactions.

These changes are only likely to have a significant impact on those with more sophisticated or complex tax affairs.

#AS2014 Income tax loss reliefs from avoidance arrangements stopped