CTM81565 - Groups: group relief: surrendering company not UK resident: amount of the loss: UK recomputation: residence

CTA10/S123 & 124

In order to quantify the loss eligible for relief, the foreign loss is to be recomputed in accordance with UK principles,

(CTM81560).

To enable the recomputation to be carried out, the extended rules require assumptions to be made about the surrendering company.

In the following paragraphs a reference to a ‘loss period’ is to be read as a reference to the period defined by the rules of the relevant European Economic Area (EEA) territory for which the EEA tax loss is computed. This could be a period of account, a tax return period or some other period where these are coincident.

Assumptions as to residence

It is assumed that the company:

• is resident in the UK throughout the loss period; and
• became UK resident from the beginning of the loss period.

Assumptions as to the place in which any trade is carried on

Any losses arising from a trade carried on by a company wholly outside the UK would not be of a type listed at CTA10/S99(1) and so would be unavailable for surrender by way of group relief.

It is therefore assumed that:

• any trade carried on in the loss period wholly or partly in the EEA territory concerned, is carried on wholly or partly in the UK. This enables the trade to be regarded as one to which CTA10/S100(1) applies, so that losses in the trade may be surrendered.
• any interest in land in the EEA territory relates to a UK property business or land in the UK to which CTA10/S102(1) applies, so that any losses may be available for surrender by way of group relief.