CTM80255 - Groups: group relief: non coinciding accounting periods or group relationships - example

CTA10/Ss138-142

This example shows the operation of CTA10/Ss138 to 142 (CTM80210 and CTM80215).

Company	Accounting period	Profit or Loss
A	12 months to 31 December 2011	Profit £72,000
B	12 months to 31 December 2011	Loss (£100,000)
C	6 months to 30 June 2011	Profit £5,000
D	12 months to 30 September 2011	Loss (£120,000)
E	12 months to 31 May 2012	Profit £160,000

A, B, C, and D are in a group relationship throughout. E joined the group on 1 June 2011.

C claims group relief from D.

A claims from D and then from B.

E claims from D and then from B.

C’s claim from D (no prior surrenders or claims)

The overlapping period (CTM80225) is the six months ended 30 June 2011.

D’s ‘unused part of the surrenderable amounts’ is the same as its ‘surrenderable amount for the overlapping period’ (CTM80230). This is because there have been no prior surrenders of D’s losses. It is:

6/12 x £120,00 = £60,000

C’s ‘unrelieved part of the claimant company’s available total profits is also the same as its ‘available total profits for the overlapping period’ (CTM80235). This is because it has made no prior claims. It is:

6/6 x £5,000 = £5,000

The amount that can be surrendered/claimed is the smaller of these (CTM80215). It is £5,000.

A’s claim from D (prior surrender)

The overlapping period is nine months ended 30 September 2011.

D’s ‘surrenderable amount for the overlapping period’ is:

9/12 x £120,000 = £90,000

D’s ‘unused part of the surrenderable amount’ is this amount less the ‘amount of prior surrenders for the overlapping period’.

Following the steps in CTM80240:

Step 1

C’s prior claim from D involves part of D’s surrenderable amount for accounting period ended 30 September 2011

Step 2

C’s prior claim of £5,000 was for the overlapping period of six months ended 30 June 2011.

The common period of the overlapping periods in C’s claim and A’s claim is six months ended 30 June 2011.

The whole six month overlapping period for C’s prior claim is included in the common period, so the whole of the £5,000 is apportioned to that common period.

Step 3

The total, £5,000, is the ‘amount of any prior surrenders for the overlapping period’.

So D’s ‘unused part of the surrenderable amounts’ is £90,000 less £5,000 which is £85,000.

A’s ‘unrelieved part of the claimant company’s available total profits’ is the same as its ‘available total profits for the overlapping period’. This is because it has made no prior claims. It is:

9/12 x £72,000 = £54,000

The amount that can be surrendered/claimed is the smaller of £85,000 and £54,000, which is £54,000.

A’s claim from B (prior claim)

The overlapping period is 12 months ended 31 December 2011.

B’s ‘unused part of the surrenderable amounts’ is the same as its ‘surrenderable amount for the overlapping period’. This is because there have been no prior surrenders of B’s losses. It is:

12/12 x £100,000 = £100,000

A’s ‘available total profits for the overlapping period’ are £72,000. The ‘unrelieved part of the claimant company’s available total profits’ is this amount less ‘the amount of previously claimed group relief for the overlapping period’.

Following the steps in CTM80245:

Step 1

A has claimed from D for the accounting period ended 31 December 2011.

Step 2

A’s prior claim from D of £54,000, was for the overlapping period of nine months ended 30 September 2011.

The common period of the overlapping periods for the claim from D and the claim from B is the nine months ended 30 September 2011.

The whole nine month overlapping period for the prior claim is included in the common period, so the whole of the £54,000 group relief given is apportioned to that common period.

Step 3

The total, £54,000, is the ‘amount of previously claimed group relief for the overlapping period’.

So A’s ‘unrelieved part of the claimant company’s available total profits’ is £72,000 less £54,000 which is £18,000.

The amount that can be surrendered/claimed is the smaller of £100,000 and £18,000, which is £18,000.

E’s claim from D (prior surrenders)

The overlapping period is four months ended 30 September 2011.

D’s ‘surrenderable amount for the overlapping period’ is:

4/12 x £120,000 = £40,000

D’s ‘unused part of the surrenderable amounts’ is this amount less the ‘amount of prior surrenders for the overlapping period’.

Following the steps in CTM80240:

Step 1

C’s claim from D involves part of D’s surrenderable amount for accounting period ended 30 September 2011.

A’s claim from D involves part of D’s surrenderable amount for accounting period ended 30 September 2011.

Step 2

C’s prior claim of £5,000, was for the overlapping period of six months ended 30 June 2011.

The common period of the overlapping periods in C’s claim and E’s claim is the one month ended 30 June 2011.

The £5,000 is apportioned to that common period:

1/6 x £5,000 = £833

A’s prior claim of £54,000, was for the overlapping period of nine months ended 30 September 2011.

The common period of the overlapping periods in A’s claim and E’s claim is four months ended 30 September 2011.

The £54,000 is apportioned to that common period:

4/9 x £54,000 = £24,000

Step 3

The total £24,833 (£833 plus £24,000) is the ‘amount of prior surrenders for the overlapping period’.

So D’s ‘unused part of the surrenderable amounts’ is £40,000 less £24,833 which is £15,167.

E’s ‘unrelieved part of the claimant company’s available total profits’ is the same as its ‘available total profits for the overlapping period’. This is because it has made no prior claims. It is:

4/12 x £160,000 = £53,333

The amount that can be surrendered/claimed is the smaller of these: £15,167.

E’s claim from B (prior surrender and claim)

The overlapping period is seven months ended 31 December 2011.

B’s ‘surrenderable amount for the overlapping period’ is

7/12 x £100,000 = £58,333

B’s ‘unused part of the surrenderable amounts’ is this amount less the ‘amount of prior surrenders for the overlapping period’.

Following the steps in CTM80240:

Step 1

A’s claim from B involves part of B’s surrenderable amount for accounting period ended 31 December 2011.

Step 2

A’s prior claim from B of £18,000, was for the overlapping period of 12 months ended 31 December 2011.

The common period of the overlapping periods in A’s claim and E’s claim is seven months ended 31 December 2011.

The £18,000 is apportioned to that common period:

7/12 x £18,000 = £10,500

Step 3

£10,500 is the ‘amount of prior surrenders for the overlapping period’.

So B’s ‘unused part of the surrenderable amounts’ is £58,333 less £10,500 which is £47,833.

E’s available total profits for the 12 month accounting period to 31 March 2012 are £160,000. Its available total profits for the overlapping period are:

7/12 x £160,000 = £93,333

The ‘unrelieved part of the claimant company’s available total profits’ is this amount less ‘the amount of previously claimed group relief for the overlapping period’.

Following the steps in CTM80245:

Step 1

E has claimed from D for the accounting period ended 31 March 2012.

Step 2

E’s prior claim from D of £15,167, was for the overlapping period of four months ended 30 September 2011.

The common period of the overlapping periods in the claim from D and the claim from B is also four months ended 30 September 2011.

The whole four month overlapping period for the prior claim is included in the common period, so the whole of the £15,167 is apportioned to that common period.

Step 3

The total, £15,167, is the ‘amount of previously claimed group relief for the overlapping period’.

So E’s ‘unrelieved part of the claimant company’s available total profits’ is £93,333 less £15,167 which is £78,166.

The amount that can be surrendered/claimed is the smaller of £47,833 and £78,166, which is £47,833.