CTM82535 - Corporation Tax: Group relief for carried-forward losses: Prior surrenders relating to loss-making period
CTA10/S188EC
The unused parts of the surrenderable amounts attributable to the loss making period must not include losses that have previously been surrendered for the overlapping period.
To identify amounts surrendered on prior claims for the overlapping period, identify any claims to group relief for carried-forward losses under CTA10/S188CB and CTA10/S188CC by any company which relate to the same surrenderable amounts as the current claim.
If the prior claims have been withdrawn, you do not need to remove any amount from the surrenderable amounts of the surrendering company. If not, then take the following steps for each prior claim:
Step 1
Identify the overlapping period for the prior claim.
Step 2
Identify any period that is common to the overlapping period of the prior claim and the overlapping period of the current claim. If there is no common period, there is no previously used amount in relation to the prior claim and you do not need to remove any amount from the surrenderable amounts.
Step 3
If there is a common period, you must remove from the surrenderable amounts the amount used in the prior claim that relates to that common period. To determine this amount, take the proportion of the overlapping period for the prior claim that is included in the common period, and apply that proportion to the amount of group relief for carried-forward losses given on the prior claim. For prior claims made under consortium condition 3 or 4, this is the amount removed from the surrenderable amounts.
Step 4
If the prior claim was made under consortium condition 1 or 2, identify the amount of the prior claim that relates to the loss-making period. To determine this amount, multiply the amount arrived at under Step 3 by A / B, where:
A is all of the surrenderable amounts attributable to the loss-making period, and
B is the total surrenderable amount for the surrender period.
The amount arrived at is the amount removed from the surrenderable amounts.
Follow this process for every prior claim that relates to the surrenderable amounts.
Example
Company U is a consortium company with losses carried forward of £800,000, of which £400,000 is attributable to a loss-making period.
Company V is a member of the consortium and is making a claim for the carried-forward losses in Company U (the current claim). Company V has the same accounting period as Company U, therefore the overlapping period is the whole 12 months of the surrender period. Condition 3 is met throughout the period from the loss-making period to the surrender period (CTA10/S188CH).
Prior claims under CTA10/S188CC
Company W, a company in the same group of companies as Company V, has already claimed relief for £200,000 under condition 4 from Company U. The overlapping period of this prior claim has a 6 month period that is common to the overlapping period of the current claim. The amount of the prior surrender is:
£200,000 x (6 / 12) = £100,000
This amount is removed from the surrenderable amount.
Prior claims under CTA10/S188CB
Company X, a company in the same group of companies as Company U, has already claimed relief for £60,000 under the group condition from Company U. Company X has the same accounting period as Company U, so the common period is the 12 month surrender period. The amount of this prior claim relating to the loss-making period is:
£400,000 (surrenderable amount attributable to loss-making period) £800,000 (total surrenderable amount)
x £60,000 = £30,000
This amount is also removed from the surrenderable amount.
| Amount attributable to loss-making period | £400,000 |
|---|---|
| Prior surrender to Company W under condition 4 | (£100,000) |
| Prior surrender to Company X under group condition | (£30,000) |
| Unused surrenderable amount available to Company V | £270,000 |
Company V’s claim is subject to any potential Part 5 group relief, and also to its relevant maximum (CTM05030).