SCHEDULES
SCHEDULE 2Transitionals and savings
Part 5Losses (except losses on disposal of shares)
Restriction on reliefs for non-active partners: pre-10 February 2004 events
33
1
Sub-paragraphs (2) to (9) set out relief which is not covered by section 110(5) (relevant relief).
2
Relief is not covered if it is given for a loss made in a trade in a tax year the basis period for which ends before 10 February 2004.
3
Sub-paragraphs (4) to (9) apply if the individual carried on a trade in a tax year the basis period for which includes 10 February 2004.
4
Relief given for a loss made in the trade is not covered so far as the loss derives from an allowance or deduction within sub-paragraph (5).
5
An allowance or deduction is within this sub-paragraph if it is—
a
a capital allowance in respect of expenditure incurred before 10 February 2004 which is treated as an expense of the trade, or
b
a deduction in respect of expenditure incurred before 10 February 2004 under section 42(1) of F(No.2)A 1992 or any of sections 138 to 140 of ITTOIA 2005.
6
For the purposes of sub-paragraph (4) the amount of a loss that derives from an allowance or deduction within sub-paragraph (5) is determined on a just and reasonable basis.
7
Relief given for a loss made in the trade is not covered so far as it is given for the pre-announcement allowance in relation to the trade.
8
“Pre-announcement allowance” is to be read in accordance with section 118ZJ(4) and (6) to (8) of ICTA.
9
For that purpose, references to the first restricted year are to be read as references to the tax year mentioned in sub-paragraph (3).
If sub-paragraph (3) covers more than one tax year, the first restricted year is the first of the tax years covered.
10
Sub-paragraph (11) applies for the purpose of applying the restriction in section 110(4) (relevant relief not to exceed contribution to the firm) in relation to an individual if before 10 February 2004 the individual contributed an amount of capital to the firm.
11
That amount of capital is reduced (but not below nil)—
a
by the amount of relief (if any) to be left out of account for the purposes of section 110(5) as a result of paragraph 32 or this paragraph (ignoring sub-paragraph (4)), and
b
by any pre-announcement allowance so far as—
i
relief has not been given for the allowance, and
ii
had relief been given for the allowance, the relief would have to be left out of account for the purposes of section 110(5)(b) as mentioned in paragraph (a).