CTM82150 - Reform of Corporation Tax loss relief: Group relief for carried-forward losses: Amount of prior claims
CTA10/S188DB(3), CTA10/S188DE, CTA10/S188DF(3)
The amount of group relief for carried-forward losses that can be claimed is limited to the smaller of two amounts (s188DB). These are:
That is, the amount of surrenderable loss which is attributable to the
overlapping period that has not already been surrendered (CTA10/S188DC).
- The company’s relevant maximum for the overlapping period less any amount previously claimed for the same period (CTA10/S188DE).
Amount of prior claims
To calculate the total amount of previously claimed group relief for carried-forward losses for the overlapping period, first identify each prior claim for the same accounting period (AP) as the current claim. A prior claim for this purpose is a claim made under CTA10/S188CB or 188CC for the same claim period that has not been withdrawn (s188DE(2)). There is a certain order in which claims are dealt with.
For each prior claim, work out the amount previously claimed as group relief for carried-forward losses:
Step 1
- Identify the overlapping period for the prior claim
Step 2
- Identify any common period between the overlapping period for the current claim and the overlapping period for the prior claim.
- If there is no common period, there is no previously claimed amount in relation to the prior claim so ignore step 3.
Step 3
- If there is a common period, time apportion the amount of group relief for carried-forward losses given on the prior claim, by reference to the proportion of the overlapping period for the prior claim that is included in the common period.
- If time apportionment would produce an unjust or unreasonable result, another basis is to be used which gives a result that is just and reasonable (CTA10/S188DF(3)).
Add up all the apportioned amounts from step 3. The result is the amount previously claimed as group relief for carried-forward losses for the overlapping period of the current claim.
Example
In this example, losses have been time apportioned on a monthly basis for simplicity. Normally, time apportionment should be made by reference to days. Companies A, B, and C are members of the same group of companies for group relief purposes. None of the conditions that would make group relief for carried-forward losses unavailable apply.
| Company | Description | Amount |
|---|---|---|
| Company A | AP 12 months to 31 Dec 2019 | Profit £150,000 |
| Company B | Post-1 April 2017 losses carried forward to the AP 12 months to 31 Dec 2019 | Loss (£50,000) |
| Company C | Post-1 April 2017 losses carried forward to the AP 12 months to 30 Jun 2019 | Loss (£40,000) |
For the APE 31 December 2019, Company A makes a prior claim of £40,000 for Company C’s carried-forward losses. Company A then makes a later claim of £50,000 for Company B’s carried-forward losses.
The amount previously claimed is worked out as follows:
Step 1
Company A’s prior claim from Company C was for the overlapping period of 6 months from 1 January 2019 to 30 June 2019.
Step 2
The common period of the overlapping period for the prior claim from Company C and the later claim from Company B is the 6 months from 1 January to 30 June 2019.
Step 3
The whole overlapping period for the prior claim is included in the common period, therefore the £40,000 does not need to be apportioned to the common period.
£40,000 is the total amount previously claimed for the overlapping period.