OT65130 - Transferable Tax History - Basic example of tracking
Company A sells its 100% holding in a field to company B and transfers its Tax history of £5000 in the sale. From the date of transfer B then has to track the profits of the field and show this alongside their tax computation.
| Year | Profit/Loss for the year | Total Net Tracked Profits |
|---|---|---|
| 1 | 1,000 | 1,000 |
| 2 | 900 | 1,900 |
| 3 | -500 | 1,400 |
| 4 | 100 | 1,500 |
| 5 | 300 | 1,800 |
If the decommissioning expenditure in year 6 was £6,000 then the total TTH activated and available for use by the buyer would be £4,200 - calculated as £6,000 less £1,800.
Details of how this activated amount can be used will be covered in loss carry back guidance.
Any losses of the TTH asset made in a year will be netted off when calculating Total Net Tracked Profits (TNTP). There are no loss rules equivalent to those for Corporation tax when calculating tracked profits.
An asset cannot make a tracked loss overall. Where the total net tracked profits would be negative, the total net tracked profits are treated as zero.