Section 725 Reversal of previous accounting loss

(1)

This section applies if—

(a)

in a period of account a gain is recognised in determining the company's profit or loss (“the recognised gain”),

(b)

the gain wholly or partly reverses a loss recognised in a previous period of account (“the reversed loss”), and

(c)

a debit was brought into account for tax purposes under Chapter 3 (debits in respect of intangible fixed assets) in respect of that loss (“the tax debit”).

(2)

A corresponding credit must be brought into account for tax purposes.

(3)

The amount of the credit is—

RG \times \frac{D}{RL}

where—

RG is the recognised gain,

D is the tax debit, and

RL is the reversed loss.

(4)

This section does not apply to a gain on a revaluation within the meaning of section 723 (see subsection (5) of that section).

Notes on Part 8

Modifications

C1: Pt. 8 modified (1.1.2010) by Northern Rock plc (Tax Consequences) Regulations 2009 (S.I. 2009/3227), regs. 1, 6(1)
C2: Pt. 8 modified (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), ss. 601, 1184(1) (with Sch. 2)
C3: Pt. 8 modified (1.10.2011) by Postal Services Act 2011 (c. 5), s. 93(2)(3), Sch. 2 para. 6(1); S.I. 2011/2329, art. 3
C4: Pt. 8 modified (15.11.2011 for specified purposes, 30.3.2012 for E.W.) by Localism Act 2011 (c. 20), ss., 240(5)(o), Sch. 24 para. 1(3); S.I. 2012/628, art. 3(b)
C5: Pt. 8 modified (1.4.2012) by Budget Responsibility and National Audit Act 2011 (c. 4), s. 29, Sch. 4 para. 3(1); S.I. 2011/2576, art. 5
C6: Pt. 8 modified (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 88(1)(2)(7) (with s. 147, Sch. 17)
C7: Pt. 8 modified (6.4.2020) by Finance Act 2019 (c. 1), Sch. 5 paras. 35, 45 (with Sch. 5 para. 36)