PART XIX

Losses

Chapter I

Relief for Losses

307. —(1) Subject to the provisions of this section, where in any year of assessment any person has sustained a loss in any trade, profession or employment, carried on by him either solely or in partnership, or in the occupation of lands for the purposes of husbandry only, or in the occupation of woodlands in respect of which he has elected to be charged to tax under Schedule D, he shall be entitled, on making a claim in that behalf, to such repayment of tax as is necessary to secure that the aggregate amount of tax for the year ultimately borne by him will not exceed the amount which would have been borne by him if his income had been reduced by the amount of the loss.

(2) (a) For the purposes of subsection (1) the amount of tax which would have been borne if income had been reduced by the amount of a loss shall be computed—

(i) where the loss has been sustained by an individual, on the basis of treating the loss as reducing first the appropriate income of the individual, then the other income of the individual, then the appropriate income of the individual's wife or husband and then the other income of the individual's wife or husband, and

(ii) where the loss has been sustained in a trade carried on by a body corporate, on the basis of treating the loss as reducing first the income of the body corporate from profits or gains of the trade in which the loss was sustained and then the other income of the body corporate.

(b) For the purposes of paragraph (a) (i), “appropriate income” means either earned or unearned income according as income arising during the same period as the loss to the person sustaining it from the same activity would have been that person's earned or unearned income.

(3) Except as is otherwise provided by section 216 (2), the amount of a loss sustained in an activity shall, for the purposes of this section, be computed in like manner as profits or gains arising or accruing from the activity would be computed under the relevant provisions of this Act.

(4) Where repayment has been made to a person for any year under this section—

(a) no portion of the loss which, in the computation of the repayment, was treated as reducing his income shall be taken into account in computing the amount of an assessment for any subsequent year, and

(b) so much of the loss as was required, by subsection (2), to be treated as reducing income of a particular class or income from a particular source, shall for all the purposes of this Act, be regarded as a deduction to be made from income of that class or from income from that source, as the case may be, in computing the person's total income for the year.

(5) Any claim to repayment under this section shall be made, in a form prescribed by the Revenue Commissioners, not later than two years after the end of the year of assessment and shall be made to, and determined by, the inspector, but any person aggrieved by any determination of the inspector on any such claim may, on giving notice in writing to the said inspector within twenty-one days after notification to him of the determination, appeal to the Special Commissioners.

(6) The Special Commissioners shall hear and determine an appeal to them under subsection (5) as if it were an appeal to them against an assessment to income tax and the provisions of this Act relating to the rehearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.

308. —A person who carries on, either solely or in partnership, two or more distinct trades the profits of which are chargeable under Schedule D may deduct from or set off against the profits as computed under this Act in respect of one or more such trades, the loss so computed sustained in any other such trade, and may make separate statements as to each such trade.

309. —(1) Where a person has in any trade or profession carried on by him, either solely or in partnership, sustained a loss (to be computed in like manner as profits or gains under the provisions of this Act applicable to Cases I and II of Schedule D) in respect of which relief has not been wholly given under section 307 or 308 or under any other provision of this Act, he may claim that any portion of the loss for which relief has not been so given shall be carried forward and, as far as may be, deducted from or set off against the amount of profits or gains on which he is assessed under Schedule D in respect of that trade or profession for any subsequent year of assessment, save that if and in so far as relief in respect of any loss has been given to any person under this section that person shall not be entitled to claim relief in respect of that loss under any other provision of this Act.

(2) Any relief under this section shall be given as far as possible from the first subsequent assessment, and so far as it cannot be so given then from the next assessment and so on.

(3) Where a loss is sustained—

(a) by a person in the occupation of woodlands, who, if he had made a profit, would, by reason of his election under section 36, have been chargeable for the succeeding year to tax under Schedule D computed on the amount of that profit, or

(b) by a person in the occupation of lands who, if he had made a profit, would, in consequence of his election under section 34, have been chargeable for the succeeding year to tax under Schedule D computed on the amount of that profit;

this section shall apply so as to give relief in respect of that loss in the same manner and to the same extent as if it were a loss sustained in a trade:

Provided that, if for any year after the year in which the loss is sustained the person who suffered the loss is assessed under Schedule B in respect of the occupation of the lands in question no such deduction or set-off as aforesaid shall in respect of that loss be allowed for that or any succeeding year.

310. —(1) Where in any year of assessment a person sustains a loss in any transaction (being a transaction of such kind that, if any profits had arisen therefrom, he would have been liable to be assessed in respect thereof under Case IV of Schedule D) in which he engages, whether solely or in partnership, he may claim that the amount of the said loss shall, as far as may be, be deducted from or set off against the amount of profits or gains on which he is assessed under the said Case IV for that year and that any portion of the loss for which relief is not so given shall be carried forward and, as far as may be, deducted from or set off against the amount of profits or gains on which he is assessed under the said Case IV for any subsequent year of assessment.

(2) In the application of this section to a loss sustained by a partner in a partnership, “the amount of profits or gains on which he is assessed” shall, in respect of any year, be taken to mean such portion of the amount on which the partnership is assessed under Case IV of Schedule D as he would be required under this Act to include in a return of his total income for that year.

(3) Any relief under this section by way of carrying forward any portion of a loss shall be given as far as possible from the first subsequent assessment, and so far as it cannot be so given then from the next assessment and so on.

311. —(1) Where a trade or profession is permanently discontinued, and any person carrying it on, either solely or in partnership, immediately before the time of the discontinuance, has sustained therein a loss to which this section applies (hereafter in this Chapter referred to as a terminal loss), then, subject to the provisions of sections 312 to 315, he may claim that the amount of the terminal loss shall, as far as may be, be deducted from or set off against the amount of profits or gains on which he has been charged to income tax under Schedule D in respect of the trade or profession for the three years of assessment last preceding that in which the discontinuance occurs, and there shall be made all such amendments of assessments or repayments of tax as may be necessary to give effect to the claim:

Provided that relief shall not be given in respect of the same matter both under this section and under some other provision of this Act.

(2) Any relief under this section shall be given as far as possible from the assessment for a later rather than an earlier year.

312. —(1) The question whether a person has sustained any, and if so what, terminal loss in a trade or profession shall for the purposes of section 311 be determined by taking the amounts, if any, of the following (in so far as they have not been otherwise taken into account so as to reduce or relieve any charge to tax), that is to say:

(a) the loss sustained by him in the trade or profession in the year of assessment in which it is permanently discontinued;

(b) the relevant capital allowances for that year of assessment;

(c) the loss sustained by him in the trade or profession in the part of the preceding year of assessment beginning twelve months before the date of the discontinuance;

(d) the same fraction of the relevant capital allowances for that preceding year of assessment as the part beginning as aforesaid is of a year.

(2) In subsection (1), “the relevant capital allowances” means, in relation to any year of assessment, the capital allowances falling to be made in charging the profits or gains of the trade or profession for that year excluding amounts carried forward from an earlier year, and, for the purposes of subsection (1)(a)(c), the amount of a loss shall be computed in like manner as profits or gains are computed under the provisions of this Act applicable to Cases I and II of Schedule D.

313. —(1) Subject to subsection (3), the amount of the profits or gains on which a person has been charged to income tax for any year of assessment in respect of the profits or gains of a trade or profession shall, for the purposes of relief under section 311 from the assessment for that year, be taken to be the full amount of the profits or gains on which he was assessable for that year reduced by—

(a) a sum equal to the total amount of the deductions, if any, in respect of capital allowances made in charging the profits or gains, and

(b) a sum equal to the total amount of the deductions, if any, in respect of payments made or losses sustained, which fell to be made from the profits or gains in computing for income tax purposes the person's total income for the year, or would have fallen to be so made if the person were an individual, and

(c) in the case of a body of persons, a sum equal to so much of the profits or gains as was applied in payment of dividends:

Provided that where any deduction such as is mentioned in paragraph (b) may be treated in whole or in part either as having been made from the profits or gains or as having been made from other income, the deduction shall, as far as may be, be treated for the purposes of this subsection as made from the other income.

(2) Where, under subsection (1) (b), the amount of the profits or gains on which a person was assessable for any year is reduced by reference to a payment made by him, a like reduction shall be made in the amount of the terminal loss for which relief may be given under section 311 for earlier years unless the payment was made wholly and exclusively for the purposes of the trade or profession.

(3) Where a person claiming relief under section 311 on a discontinuance has, since the beginning of the third year of assessment preceding that in which the discontinuance occurs, carried on the trade or profession in partnership, the full amount of the profits or gains on which he was assessable for any year, or part of a year, prior to 1965-66 for which the partnership was assessed in respect of the trade or profession, shall, for the purposes of subsection (1), be taken to be the amount of his share, computed in accordance with this Act, of the profits or gains on which the partnership has been charged to tax and the amount of the profits or gains on which the partnership has been so charged shall, for this purpose, be computed as it would be computed under subsection (1) if that subsection applied to a partnership as it applies to a person.

314. —(1) For all the purposes of sections 311 to 315 a trade or profession shall be treated as permanently discontinued and a new trade or profession set up or commenced when it is so treated for the purposes of section 59, or where by reference to section 71 (1) (a) (ii) a several trade of a partner has been deemed to have been permanently discontinued, but—

(a) a person who continues to be engaged in carrying it on immediately after such a discontinuance shall not be entitled to relief in respect of any terminal loss on that discontinuance, and

(b) on any discontinuance, a person not continuing to be so engaged may be given relief in respect of a terminal loss against profits or gains on which he was charged in respect of the same trade or profession for a period before a previous discontinuance, if he has been continuously engaged in carrying it on between the two discontinuances, and, in his case, if the previous discontinuance occurred within twelve months before the other, it shall be disregarded for the purposes of section 312 (1).

(2) In sections 312 and 313 “capital allowances” means allowances, other than allowances falling to be made in computing profits or gains, under section 241 or Part XIV, XV, XVI or XVII.

315. —(1) Any claim under section 311 shall be made to and determined by the inspector, but any person aggrieved by any decision of the inspector on any such claim may, on giving notice in writing to the said inspector within twenty-one days after the notification to him of the decision, appeal to the Special Commissioners.

(2) The Special Commissioners shall hear and determine an appeal to them under subsection (1) as if it were an appeal against an assessment to income tax, and the provisions of this Act relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law shall, with the necessary modifications, apply accordingly.

316. —(1) Subject to the provisions of this section, where a person has been assessed to tax for the year 1963-64 or a subsequent year of assessment under section 434, in respect of a payment made wholly and exclusively for the purposes of a trade or profession, the amount on which tax has been paid under that assessment shall, for the purposes of sections 309 and 311 to 315, be treated as though it were a loss sustained in that trade or profession and relief in respect thereof shall be allowed accordingly:

Provided that no relief shall be allowed under this section in respect of any such payment or any part of such payment which is not ultimately borne by the person assessed or which is charged to capital.

(2) This section shall not apply to any sum assessed under section 434 by virtue of Chapter II of Part XII or section 221 (2) (b), 288, 363 or 435.