BKM304900 - Bank loss restriction: calculation of carried-forward reliefs available: particular considerations for group and consortium relief under CTA10/PART5

CTA10/S269CD, S269ZF, S105, & S147 to S149

For general guidance on the calculation of relevant profits see BKM304100 and for guidance on the effect of the calculation on the availability of group relief (and other reliefs) see BKM304800.

Surrenderable amounts

A company can only surrender certain relevant amounts to the extent that they exceed the company’s profit related threshold (CTA10/S105; CTM80142). The profit related threshold is calculated without including reliefs of other periods including reliefs brought forward and treated as being of the current period (such as losses of a UK property business). The restriction should therefore have no effect on the surrender of relevant amounts.

Assumptions for consortium claims to group relief

A company owned by a consortium for the purposes of Part 5 of the Corporation Tax Act 2010 must calculate its amount available to surrender as group relief under CTA10/PART5 as if it had made any possible claims for trading losses of the year and made all possible claims for group relief. (CTA10/S147 and S148; CTM80570 and CTM80580.)

For periods prior to 1 April 2017, if the company owned by a consortium is within the bank loss restriction, then when calculating the amount available for surrender the company must do so on the basis of the amount of total profits it could claim against in the context of steps 1 and 4 of CTA10/S269CD – that is total profits without including any of the relevant carried-forward losses.

For periods from 1 April 2017, a company owned by a consortium may be affected by the general loss restriction at CTA10/PART7ZA as well as the bank loss restriction. If the company is affected by either restriction, when it calculates the amount available for surrender it must do so on the basis of total profits it could claim against without including any carried-forward losses subject to the general loss restriction (CTA10/S269ZB(3), S269ZC(2), S269ZD(3)).

Similarly, a company owned by a consortium which is claiming relief under CTA10/PART5 must calculate the amount of its available total profits as reduced by the group’s potential relief (the maximum amount of relief the company owned by a consortium could claim from group companies under Part 5; CTA10/S149; CTM80585). For periods prior to 1 April 2017, if it is a banking company which is owned by a consortium and claiming relief, any reduction for the group’s potential relief should be based on claims against the profits not including any relevant carried-forward losses. For periods from 1 April 2017, any reduction for the group’s potential relief should be based on claims against profits not including any carried-forward losses subject to the general loss restriction.