INTM561400 - Hybrids: allocation of DII within a group: the unused part of DII shortfall

This is the DII shortfall of Company B during the shortfall period less the total amount treated as DII as a result of a prior allocation claim (previously matched amount).

Step 1 – Identify any prior allocation claim for the shortfall period

Step 2 – Determine the previously matched amounts in relation to each prior allocation claim identified in Step 1

Step 3 – Deduct the total of all previously matched amounts determined in Step 2 from the DII shortfall for the shortfall period to get the unused part of the DII shortfall.

This amount can be used in a subsequent allocation claim for that shortfall period.

Example

Company B has an accounting period of 1 April 2022 to 31 March 2023 in which it has a DII shortfall.

Company C has an accounting period of 1 July 2022 to 30 June 2023 in which it has a DII surplus.

The overlapping period between Company B and Company C is 1 July 2022 to 31 March 2023.

Company B has a DII shortfall for its shortfall period of 100.

Company B has already made an allocation claim (prior allocation claim) to Company C.

Company C had a DII surplus of 100

The proportion of Company C’s 12-month surplus period that falls within the overlapping period with Company B is 75, which is (9/12) months of the overlapping period multiplied by DII surplus of 100.

Company B’s prior allocation claim is therefore for 75 of Company’s C’s DII surplus.

Step 1 – The claim for DII surplus to Company C is the only prior allocation claim.

Step 2 – The amount of Company B’s DII shortfall now treated as DII (previously matched amount) is 75.

Step 3 – The unused DII shortfall for the period is 25, which is the total DII shortfall for the shortfall period of 100, less the previously matched amount of 75.