Finance (No. 2) Bill (HL Bill 156)

(7) No claim may be made under subsection (5) in respect of so much of
the unrelieved amount as is surrendered under Part 5A of CTA 2010
(group relief for carried-forward losses).

(8) A claim under subsection (5) must be made within—

(a) 5the period of two years after the end of the first accounting
period after the deficit period, or

(b) such further period as an officer of Revenue and Customs
allows.

(9) No relief may be given under this section against ring fence profits of
10the company within the meaning of Part 8 of CTA 2010 (oil activities)
or contractor’s ring fence profits of the company within the meaning
of Part 8ZA of that Act (oil contractors).

(10) In this Chapter—

(a) “company with investment business” has the same meaning
15as in Part 16 (see section 1218B);

(b) references to a company’s investment business are to be
construed in accordance with section 1219(2).

463H Where an investment business becomes small or negligible

(1) Subsections (3) to (7) apply if—

(a) 20section 463G would apply but for the fact that the company’s
investment business became small or negligible in the
accounting period mentioned in subsection (3)(b) of that
section, or

(b) subsections (4) to (8) of section 463G would apply by virtue
25of section 463I but for the fact that the company’s investment
business became small or negligible in the accounting period
mentioned in section 463I(1)(c)(ii).

(2) In this section the “unrelieved amount”—

(a) in a case within subsection (1)(a), is to be interpreted in
30accordance with section 463G(2);

(b) in a case within subsection (1)(b) means so much of the deficit
mentioned in section 463I(1)(a) as is not set off as mentioned
in section 463I(1)(b)(i) or surrendered as mentioned in section
463I(1)(b)(ii).

(3) 35The unrelieved amount is carried forward to the next accounting
period (“period 2”) after the period mentioned in subsection (1)(a) or
(1)(b).

(4) So much of the unrelieved amount as is not the subject of a claim
under subsection (6) must be set off against the non-trading profits
40of the company for period 2.

(5) Those profits are reduced accordingly.

(6) The company may make a claim for relief under subsection (4) not to
be given in period 2 for the unrelieved amount or so much of it as is
specified in the claim.

(7) 45A claim under subsection (6) is effective if, and only if, it is made—

(a) within the period of two years after the end of period 2, or

(b) within such further period as an officer of Revenue and
Customs may allow.

(8) Subsection (9) applies if any amount is carried forward under
subsection (3) to an accounting period (“the carry forward period”)
5and—

(a) cannot be set off under subsection (4) against non-trading
profits of that period, or

(b) is the subject of a claim under subsection (6).

(9) If the company continues to be a company with investment business
10throughout the carry forward period, subsections (3) to (7) have
effect as if—

(a) references to the unrelieved amount were to the amount
mentioned in subsection (8), and

(b) references to the period mentioned in the subsection (1)(a) or
15(1)(b) were to the carry forward period.

(10) In this section “non-trading profits”, in relation to a company, means
so much of the company’s profits as does not consist of trading
income for the purposes of section 37 of CTA 2010 (deduction of
trading losses from total profits of the same or an earlier period).

463I 20Re-application of section 463G if any deficit remains after previous
application

(1) This section applies if—

(a) any amount of the deficit is carried forward to an accounting
period (“the later period”) of the company under section
25463G(4),

(b) any of that amount is not—

(i) set off against the company’s total profits for the later
period on a claim under section 463G(5), or

(ii) surrendered as group relief for carried-forward losses
30under Part 5A of CTA 2010, and

(c) it is not the case—

(i) that the company ceased to be a company with
investment business in the later period, or

(ii) (if the company was a company with investment
35business immediately before the beginning of the
later period) that its investment business became
small or negligible in the later period.

(2) Subsections (4) to (8) of section 463G apply as if—

(a) references to the unrelieved amount were to so much of the
40amount of the deficit carried forward to the later period as is
not set off or surrendered as mentioned in subsection (1)(b),
and

(b) references to the deficit period were to the later period.””

Non-trading losses on intangible fixed assets

5 (1) 45Section 753 of CTA 2009 (treatment of non-trading loss) is amended as
follows.

(2) In subsection (3) (carry forward of non-trading loss)—

(a) in the words before paragraph (a), after “not” insert “, in any period
(“the reference period”)”;

(b) in the words after paragraph (b) for “debit of” substitute “loss on
5intangible fixed assets for”.

(3) After subsection (3) insert—

“(4) But subsection (3) does not apply if the company ceased to be a
company with investment business in the reference period.

(5) In the application of subsection (3) to an amount of a loss previously
10carried forward under that subsection, the reference in paragraph (b)
to group relief under Part 5 of CTA 2010 is to be read as a reference
to group relief for carried-forward losses under Part 5A of that Act.

(6) In this section “company with investment business” has the same
meaning as in Part 16 (see section 1218B).””

15Expenses of management of investment business etc

6 (1) Section 1223 of CTA 2009 (carrying forward expenses of management and
other amounts) is amended as follows.

(2) In subsection (1)(b)—

(a) for “amounts” substitute “an amount”, and

(b) 20after “(2)(c),” insert “—

(i) a claim relating to the whole of the amount
has not been made under subsection (3B), or”.”

(3) After subsection (3) insert—

“(3A) But subsection (3) does not apply in relation to so much of the excess
25as is surrendered as group relief under Part 5 of CTA 2010 or as
group relief for carried-forward losses under Part 5A of that Act.

(3B) A deduction in respect of the excess may be made under section 1219
for the next accounting period only on the making by the company
of a claim.

(3C) 30A claim may relate to the whole of the excess or to part of it only.

(3D) A claim must be made—

(a) within the period of two years after the end of the next
accounting period, or

(b) within such further period as an officer of Revenue and
35Customs may allow.

(3E) Subsection (1A) of section 1219 does not apply in relation to a
deduction in respect of the excess made for the next accounting
period.””

Trading losses

7 40Chapter 2 of Part 4 of CTA 2010 (trade losses) is amended as follows.

8 In section 36 (introduction to Chapter) for subsection (1) substitute—

“(1) This Chapter provides relief for a loss made by a company in a trade
(see sections 37 to 47)”.”

9 For the italic heading before section 37 substitute—

10 (1) 5Section 45 (carry forward of trade loss against subsequent trade profits) is
amended as follows.

(2) In the heading, after “of” insert “pre-1 April 2017”.

(3) In subsection (1) after “accounting period” insert “beginning before 1 April
2017”.

(4) 10In subsection (4)(b) for “cannot be” substitute “is not”.

(5) After subsection (4) insert—

“(4A) But the company may make a claim that the profits of the trade of an
accounting period specified in the claim are not to be reduced by the
unrelieved loss, or are not to be reduced by the unrelieved loss by
15more than an amount specified in the claim.

(4B) A claim under subsection (4A) may specify an accounting period
only if it begins on or after 1 April 2017.

(4C) A claim under subsection (4A) is effective if, and only if, it is made—

(a) within the period of two years after the end of the accounting
20period specified in the claim, or

(b) within such further period as an officer of Revenue and
Customs may allow.””

(6) In subsection (5) for “section” (in the second place it occurs) substitute “,
sections 45B, 45F and”.

11 25After section 45 insert—

“45A Carry forward of post-1 April 2017 trade loss against total profits

(1) This section applies if—

(a) in an accounting period (“the loss-making period”)
beginning on or after 1 April 2017 a company carrying on a
30trade makes a loss in the trade,

(b) relief under section 37 or Part 5 (group relief) is not given for
an amount of the loss (“the unrelieved amount”),

(c) the company continues to carry on the trade in the next
accounting period (“the later period”), and

(d) 35the conditions in subsection (3) are met.

(2) But this section does not apply if the trade is a ring fence trade.

(3) The conditions are that—

(a) the trade did not become small or negligible in the loss-
making period,

(b) 40relief under section 37 was not unavailable for the loss by
reason of —

(i) section 37(5), 44, 48 or 52, or

(ii) section 1209, 1216DA, 1217DA, 1217MA, 1217SA or
1218ZDA of CTA 2009, and

(c) relief under section 37 would not be unavailable by reason of
5section 44 for a loss (assuming there was one) made in the
trade in the later period.

(4) The unrelieved amount is carried forward to the later period.

(5) The company may make a claim for relief to be given in the later
period for the unrelieved amount or for any part of it specified in the
10claim.

(6) If the company makes a claim, the relief is given by deducting the
unrelieved amount, or the specified part of it, from the company’s
total profits of the later period.

(7) A claim under this section must be made—

(a) 15within the period of two years after the end of the later
period, or

(b) within such further period as an officer of Revenue and
Customs may allow.

(8) Relief under this section is subject to restriction or modification in
20accordance with provisions of the Corporation Tax Acts.

(9) In this section “ring fence trade” has the same meaning as in Part 8
(see section 277).

45B Carry forward of post-1 April 2017 trade loss against trade profits

(1) This section applies if—

(a) 25in an accounting period (“the loss-making period”)
beginning on or after 1 April 2017 a company carrying on a
trade makes a loss in the trade,

(b) relief under section 37 or 42 or Part 5 (group relief) is not
given for an amount of the loss (“the unrelieved amount”),

(c) 30the company continues to carry on the trade in the next
accounting period (“the later period”), and

(d) case 1, 2 or 3 applies.

Case 1 is that any of the conditions in section 45A(3) are not met.

Case 2 is that relief for the unrelieved amount was not available
35under section 45A by reason of section 1210(5), 1216DB(5) or
1217DB(5) of CTA 2009.

Case 3 is that the trade is a ring fence trade.

(2) The unrelieved amount is carried forward to the later period.

(3) Relief for the unrelieved amount is given to the company in the later
40period if the company makes a profit in the trade in the later period.

(4) The relief is given by reducing the profits of the trade of the later
period by the unrelieved amount.

(5) But the company may make a claim for relief not to be given in the
later period for the unrelieved amount or for any part of it specified
45in the claim.

(6) A claim under subsection (5) is effective if, and only if, it is made—

(a) within the period of two years after the end of the later
period, or

(b) within such further period as an officer of Revenue and
5Customs may allow.

(7) If the trade is a ring fence trade, this section has effect only in relation
to so much of the loss mentioned in subsection (1)(a) as is not a non-
decommissioning loss.

(8) Relief under this section is subject to restriction or modification in
10accordance with provisions of the Corporation Tax Acts.

(9) In this section—

• “non-decommissioning loss” is to be interpreted in accordance
  with section 303A;

• “ring fence trade” has the same meaning as in Part 8 (see section
  15277).

45C Re-application of section 45A if loss remains after previous
application

(1) This section applies if—

(a) an amount of a loss made in a trade is carried forward to an
20accounting period (“the later period”) of a company under
section 45A(4),

(b) any of that amount is not deducted from the company’s total
profits of the later period on a claim under section 45A(5) or
surrendered by way of group relief for carried forward-losses
25under Part 5A,

(c) the company continues to carry on the trade in the
accounting period (“the further period”) after the later
period, and

(d) the conditions in subsection (2) are met.

(2) 30The conditions are that—

(a) the trade did not become small or negligible in the later
period, and

(b) relief under section 37 would not be unavailable by reason of
section 44 for a loss (assuming there was one) made in the
35trade in the further period.

(3) Subsections (4) to (8) of section 45A apply as if—

(a) references to the unrelieved amount were to so much of the
amount carried forward to the later period as is not deducted
or surrendered as mentioned in subsection (1)(b), and

(b) 40references to the later period were to the further period.

45D Application of section 45B if loss remains after application of section
45A

(1) This section applies if—

(a) an amount of a loss made in a trade is carried forward to an
45accounting period (“the later period”) of a company under
section 45A(4),

(b) any of that amount is not deducted from the company’s total
profits of the later period on a claim under section 45A(5) or
surrendered by way of group relief for carried forward-losses
under Part 5A,

(c) 5the company continues to carry on the trade in the
accounting period (“the further period”) after the later
period, and

(d) either of the conditions in section 45C(2) are not met.

(2) Subsections (2) to (8) of section 45B apply as if—

(a) 10references to the unrelieved amount were to so much of the
amount carried forward to the later period as is not deducted
or surrendered as mentioned in subsection (1)(b), and

(b) references to the later period were to the further period.

45E Re-application of section 45B if loss remains after previous
15application

(1) This section applies if—

(a) an amount of a loss made in a trade is carried forward to an
accounting period (“the later period”) of a company under
section 45B(2),

(b) 20any of that amount is not used under section 45B(4) to reduce
profits of the trade for the later period, and

(c) the company continues to carry on the trade in the
accounting period (“the further period”) after the later
period.

(2) 25Subsections (2) to (8) of section 45B apply as if—

(a) references to the unrelieved amount were to so much of the
amount carried forward to the later period as was not used as
mentioned in subsection (1)(b), and

(b) references to the later period were to the further period.

45F 30Terminal losses: relief unrestricted by Part 7ZA and 7A

(1) This section applies if—

(a) a company makes a loss in a trade in an accounting period
(the “loss-making period”),

(b) an amount of that loss is carried forward to an accounting
35period of the company (“the terminal period”) under section
45, 45A or 45B,

(c) relief in the terminal period is not given under section 45, 45A
or (as the case may be) 45B for that amount or for any part of
it, and

(d) 40the company ceases to carry on the trade in the terminal
period.

(2) The company may make a claim for relief to be given for the
unrelieved amount under this section.

(3) If the company makes a claim the relief is given by deducting the
45unrelieved amount from the relevant profits of the company of—

(a) the terminal period, and

(b) previous accounting periods so far as they fall (wholly or
partly) within the period of 3 years ending with the end of the
terminal period.

(4) But no deduction is to be made under subsection (3) for any
5accounting period which is—

(a) the loss-making period,

(b) a period before the loss-making period, or

(c) a period beginning before 1 April 2017.

(5) The amount of a deduction to be made under subsection (3) for any
10accounting period is the amount of the unrelieved amount so far as
it cannot be deducted under that subsection for a subsequent
accounting period.

(6) The company’s claim must be made—

(a) within the period of two years after the end of the terminal
15period, or

(b) within such further period as an officer of Revenue and
Customs may allow.

(7) In this section—

• “the unrelieved amount” means so much of the amount
  20mentioned in subsection (1)(b) for which relief is not given in
  the terminal period under section 45, 45A or (as the case may
  be) 45B, and

• “relevant profits”, in relation to the terminal period or any
  previous accounting period, means—

  (a)

  25the total profits of the company of the period, in a case
  where the unrelieved amount was carried forward to
  the terminal period under section 45A,

  (b)

  the profits of the trade of the period, in a case where
  the unrelieved amount was carried forward to the
  30terminal period under section 45 or 45B.

(8) Relief under this section is subject to restriction or modification in
accordance with provisions of the Corporation Tax Acts.

45G Section 45F: accounting period falling partly within 3 year period

(1) This section applies if an accounting period falls partly within the
35period of 3 years mentioned in section 45F(3)(b).

(2) The amount of the deduction for the unrelieved amount for the
accounting period is not to exceed an amount equal to the
overlapping proportion of the company’s relevant profits of that
period.

(3) 40The overlapping proportion is the same as the proportion that the
part of the accounting period falling within the period of 3 years
bears to the whole of the accounting period.

(4) In this section “the unrelieved amount” and “relevant profits” have
the meaning given by section 45F(7).

45H Section 45F: transfers of trade to obtain relief

Section 45F does not apply by reason of a company ceasing to carry
on a trade if—

(a) on the company ceasing to carry on the trade, any of the
5activities of the trade begin to be carried on by a person who
is not (or by persons any or all of whom are not) within the
charge to corporation tax, and

(b) the company’s ceasing to carry on the trade is part of a
scheme or arrangement the main purpose, or one of the main
10purposes, of which is to secure that that section applies by
reason of the cessation.””

UK property business losses

12 Chapter 4 of Part 4 of CTA 2010 (property losses) is amended as follows.

13 (1) Section 62 (relief for losses made in UK property business) is amended as
15follows.

(2) In subsection (4)—

(a) in the words before paragraph (a), for “Subsection (5) applies”
substitute “Subsections (5) to (5C) apply”, and

(b) for paragraph (a) substitute—

“(a) 20an amount of the loss is not deducted as mentioned in
subsection (3) or surrendered by way of group relief
under Part 5,”.”

(3) In subsection (5), for the words before paragraph (a) substitute “The
amount”.

(4) 25After subsection (5) insert—

“(5A) But relief under subsection (2) for the amount is given to the
company in the next accounting period only on the making by the
company of a claim.

(5B) A claim may relate to the whole of the amount or to part of it only.

(5C) 30A claim must be made—

(a) within the period of two years after the end of the next
accounting period, or

(b) within such further period as an officer of Revenue and
Customs may allow.

(5D) 35In the application of this section to an amount of a loss previously
carried forward under subsection (5), the reference in subsection
(4)(a) to group relief under Part 5 is to be read as a reference to group
relief for carried-forward losses under Part 5A.””

14 (1) Section 63 (company with investment business ceasing to carry on UK
40property business) is amended as follows.

(2) For subsection (2) substitute—

“(2) Subsections (3) to (7) apply if an amount of loss made in carrying on
the UK property business would be carried forward to the next
accounting period under section 62(5) but for the company ceasing

to carry on the business or to be within the charge to corporation tax
in respect of it.””

(3) In subsection (3)(b) for “that” substitute “the next accounting”.

(4) After subsection (3) insert—

“(4) 5But a deduction in respect of the amount of loss may be made under
section 1219 of CTA 2009 for the next accounting period only on the
making by the company of a claim.

(5) A claim may relate to the whole of the amount of the loss or to part
of it only.

(6) 10A claim must be made—

(a) within the period of two years after the end of the next
accounting period, or

(b) within such further period as an officer of Revenue and
Customs may allow.

(7) 15Subsection (1A) of section 1219 of CTA 2009 does not apply in
relation to a deduction in respect of the amount of loss made for the
next accounting period.””

Part 2 Restriction on deductions in respect of carried-forward losses

15 20CTA 2010 is amended as follows.

16 After section 269 insert—

““Part 7ZA Restrictions on obtaining certain deductions

Introduction

269ZA 25 Overview of Part

This Part contains provision restricting the amount of certain
deductions which a company may make in calculating its taxable
total profits for an accounting period.

Restrictions on obtaining certain deductions

269ZB 30 Restriction on deductions from trading profits

(1) This section has effect for determining the taxable total profits of a
company for an accounting period.

(2) The sum of any deductions made by the company for the accounting
period which fall within subsection (3) may not exceed the relevant
35maximum.

But this is subject to subsection (10).

(3) The following deductions fall within this subsection—

(a) any deductions under section 45(4)(b) or 45B;