CTM82530 - Corporation Tax: Group relief for carried-forward losses: Consortia: Surrenderable amounts for loss-making period

CTA10/S188EC

For claims relating to consortium conditions 3 and 4, the loss that is available for surrender as group relief for carried-forward losses is the unused part of the surrenderable amount that is attributable to the loss making period that has not already been surrendered.

Surrenderable amounts

The surrenderable amounts that are attributable to the loss-making period are the losses and other amounts that were incurred in the loss-making period that are carried forward and eligible for surrender as group relief (CTA10/S188BB(7)).

The surrenderable amount for the overlapping period is the proportion of surrenderable amounts attributable to the loss-making period that are carried forward to the surrender period and that relate to the overlapping period.

To calculate this, take the proportion of the surrender period included in the overlapping period, and apply that proportion to the surrenderable amounts attributable to the loss-making period (CTA10/S188EC(2)).

The loss or other amount should be time apportioned to calculate the amount relating to the overlapping period, unless this gives an unjust or unreasonable result in which case another method which gives a just and reasonable result is to be used.

Example

Company S is a company owned by a consortium. It has losses carried forward to the surrender period of £300,000. £200,000 of these losses were incurred in a loss-making period.

Company T is a member of the consortium, and condition 3 is met throughout the period from the specified loss-making period to the surrender period (CTA10/S188CH). There is an overlapping period in the surrender period of 6 months. There are no prior surrenders.

The proportion of the overlapping period in the surrender period is 6 / 12, and the amount of the carried-forward losses attributable to the loss-making period which relate to the overlapping period is:

£200,000 x (6 / 12) = £100,000.

So the surrenderable amount is £100,000.