CFM35710 - Loan relationships: consortia companies and impairment: carry forward of group relief
CTA09/S369
Carry forward of group relief
Whenever there is a group relief claim but no debits for impairment (after any reduction in bad debts brought about under CTA09/S365) in the group accounting period, CTA09/S369 ensures that the amount of that group relief claim is taken into account when considering subsequent restrictions under CTA09/S365. This caters for situations where the claimant makes a group relief claim but defers charging the corresponding impairment debit to a later year.
In the example at CFM35670, WD Ltd wrote off £100,000 of a £200,000 loan to a consortium company in Year 1. This debit was restricted to £68,000 because of a group relief claim of £32,000.
In Year 2 there is a group relief claim of £130,000 but no impairment debit.
In the following period (Year 3) there is no group relief claim, but there is an impairment debit of £70,000.
Year 2
CTA09/S368 reduces the group relief claim to £62,000 by past impairment loss relief given of £68,000. This reduced group relief claim is allowed, but because there is no relevant net debit in the year, this sum is also carried forward under CTA09/S369. It will be treated as group relief of the following period for the purposes of CTA09/S365 only.
Year 3
CTA09/S365 reduces the impairment debit by group relief. Here there is no group relief claim of the year, but group relief of £62,000 has been carried forward under CTA09/S369. The impairment debit is restricted by £62,000, leaving a relievable debit of £8,000.
Example
Y |
Impairment |
Adj imp’t |
Cumulative adj |
Cum net debits |
Group relief |
Adj group relief |
S367 cf |
Total relief |
|---|---|---|---|---|---|---|---|---|
1 |
100,000 |
68,000 |
32,000 |
68,000 |
32,000 |
32,000 |
0
|
100,000 |
2 |
0 |
0 |
32,000 |
0 |
130,000 |
62,000 |
62,000 |
62,000 |
3 |
70,000 |
8,000 |
94,000 |
8,000 |
0 |
0 |
0 |
8,000 |