Finance Act 1994

205 Overlap profits and overlap losses

After section 63 of the Taxes Act 1988 there shall be inserted the following section—

“63A Overlap profits and overlap losses

(1) Where, in the case of any trade, profession or vocation, the basis period for a year of assessment is given by section 62(2)(b), a deduction shall be made in computing the profits or gains of that year of an amount equal to that given by the formula in subsection (2) below.

(2) The formula referred to in subsection (1) above is—

where—

A

=

the aggregate of any overlap profits less the aggregate of any amounts previously deducted under subsection (1) above;

B

=

the number of days in the basis period;

C

=

the number of days in the year of assessment;

D

=

the aggregate of the overlap periods of any overlap profits less the aggregate number of days given by the variable “B— C” in any previous applications of this subsection.

(3) Where, in the case of any trade, profession or vocation, the basis period for a year of assessment is given by section 63, a deduction shall be made in computing the profits or gains of that year of an amount equal to—

(a) the aggregate of any overlap profits, less

(b) the aggregate of any amounts deducted under subsection (1) above.

(4) Where, in the case of any trade, profession or vocation, an amount of a loss would, apart from this subsection, fall to be included in the computations for two successive years of assessment, that amount shall not be included in the computation for the second of those years.

(5) In this section—

• “overlap profit” means an amount of profits or gains which, by virtue of sections 60 to 62, is included in the computations for two successive years of assessment; and

• “overlap period”, in relation to an overlap profit, means the number of days in the period in which the overlap profit arose.”