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

(5) A group allowance allocation statement under this section may be
submitted at a later time if an officer of Revenue and Customs allows
it.

(6) A group allowance allocation statement under this section must
5comply with the requirements of section 269ZK.

269ZJ Group allowance allocation statement: submission of revised
statement

(1) This section applies if a group allowance allocation statement has
been submitted under section 269ZI, or this section, in respect of an
10accounting period of a company that is, or was, a nominated
company (“the nominee’s accounting period”).

(2) A revised group allowance allocation statement in respect of the
nominee’s accounting period may be submitted to HMRC by the
company that is for the time being the nominated company in
15relation to the group.

(3) But if a new group allowance nomination in respect of the group
takes effect on a date before it is made, that does not affect the
validity of the submission of any revised group allowance allocation
statement submitted before the date the new nomination is made.

(4) 20A revised group allowance allocation statement may be submitted
on or before whichever is the latest of the following dates—

(a) the first anniversary of the filing date for the company tax
return for the nominee’s accounting period,

(b) if notice of enquiry (within the meaning of Schedule 18 to FA
251998) is given into a relevant company tax return, 30 days
after the enquiry is completed,

(c) if, after such an enquiry, an officer of Revenue and Customs
amends the return under paragraph 34(2) of that Schedule, 30
days after the notice of amendment is issued,

(d) 30if an appeal is brought against such an amendment, 30 days
after the date on which the appeal is finally determined.

(5) A revised group allowance allocation statement may be submitted at
a later time if an officer of Revenue and Customs allows it.

(6) In this section “relevant company tax return” means a company tax
35return of a company for an accounting period for which an amount
of group deductions allowance was, or could have been, allocated by
a previous group allowance allocation statement in respect of the
nominee’s accounting period.

(7) The references in subsection (4) to an enquiry into a relevant
40company tax return do not include an enquiry resulting from an
amendment of such a return where—

(a) the scope of the enquiry is limited as mentioned in paragraph
25(2) of Schedule 18 to FA 1998 (enquiry into amendments
when time limit for enquiry into return as originally
45submitted is passed), and

(b) the amendment relates only to the allocation of group
deductions allowance for the nominee’s accounting period.

(8) A group allowance allocation statement under this section must
comply with the requirements of section 269ZK.

269ZK Group allowance allocation statement: requirements and effects

(1) This section applies in relation to a group allowance allocation
5statement submitted under section 269ZI or 269ZJ.

(2) The statement must be signed by the appropriate person in relation
to the company giving the statement.

(3) The statement must—

(a) identify the group to which it relates,

(b) 10specify the accounting period, of the company that is or was
the nominated company, to which the statement relates (“the
nominee’s accounting period”),

(c) specify the days in the nominee’s accounting period on
which that company was the nominated company in relation
15to the group or state that that company was the nominated
company throughout the period,

(d) state the group deductions allowance the group has for the
nominee’s accounting period,

(e) list one or more of the companies that were members of the
20group and within the charge to corporation tax in the
nominee’s accounting period (“listed companies”),

(f) allocate amounts of the group deductions allowance to the
listed companies, and

(g) for each amount of group deductions allowance allocated to
25a listed company, specify the accounting period of the listed
company for which it is allocated.

(4) An amount of group deductions allowance allocated to a listed
company must be allocated to that company for an accounting
period that falls wholly or partly in the nominee’s accounting period.

(5) 30The maximum amount of group deductions allowance that may be
allocated, by the group allowance allocation statement, to a listed
company for an accounting period of that company is—

(6) The sum of the amounts allocated to listed companies by the group
45allowance allocation statement may not exceed the group deductions
allowance for the nominee’s accounting period.

(7) If a group allowance allocation statement is submitted that does not
comply with subsection (5) or (6), the company that is, for the time
being, the nominated company in relation to the group must submit
a revised group allowance allocation statement that does comply
5with those subsections within 30 days of the date on which the group
allowance allocation statement that did not comply was submitted or
within such further period as an officer of Revenue and Customs
allows.

(8) If a group allowance allocation statement—

(a) 10complies with those subsections when it is submitted, but

(b) subsequently ceases to comply with either of them,

the company that is, for the time being, the nominated company in
relation to the group must submit a revised group allowance
allocation statement that does comply with those subsections within
1530 days of the date on which the group allowance allocation
statement ceased to comply with one of those subsections or within
such further period as an officer of Revenue and Customs allows.

(9) If a company fails to comply with subsection (7) or (8), an officer of
Revenue and Customs may by written notice to the company amend
20the group allowance allocation statement as the officer thinks fit for
the purpose of making it comply with subsections (5) and (6).

(10) An officer of Revenue and Customs who issues a notice under
subsection (9) to a company must, at the same time, send a copy of
the notice to each of the listed companies.

(11) 25The time limits otherwise applicable to the amendment of a company
tax return do not apply to any such amendment to the extent that it
is made in consequence of a group allowance allocation statement
being submitted in accordance with section 269ZI or 269ZJ.

(12) The Commissioners for Her Majesty’s Revenue and Customs may by
30regulations make further provision about a group allowance
allocation statement including, in particular, provision—

(a) about the form of a statement and the manner in which it is
to be submitted,

(b) requiring a person to give information to HMRC in
35connection with a statement,

(c) as to the circumstances in which a statement that is not
received by the time specified in section 269ZJ(4) is to be
treated as if it were so received, and

(d) as to the circumstances in which a statement that does not
40comply with the requirements of this section is to be treated
as if it did comply.

269ZL Deductions allowance for company not in a group

(1) This section makes provision as to the deductions allowance of a
company for an accounting period where section 269ZG (deductions
45allowance for company in a group) does not apply.

(2) The company’s deductions allowance for the accounting period is
£5,000,000.

(3) If the accounting period is less than 12 months, the company’s
deductions allowance for the period is proportionally reduced.

269ZM Company tax return to specify amount of deductions allowance

(1) A company’s tax return for an accounting period must specify the
5amount of the company’s deductions allowance for the period.

(2) But subsection (1) applies only if the company makes for the
accounting period a deduction to which section 269ZB(2), 269ZC(2)
or 269ZD(2) or section 124D(1) of FA 2012 applies.

269ZN Excessive specifications of deductions allowance

(1) 10This section applies if a company’s tax return for an accounting
period specifies an excessive amount as—

(a) the company’s deductions allowance for the period,

(b) the company’s trading profits deductions allowance for the
period,

(c) 15the company’s non-trading profits deductions allowance for
the period,

(d) the company’s contractor’s ring fence profits deductions
allowance for the period, or

(e) the company’s BLAGAB trade profits deductions allowance
20for the period.

(2) The company must, so far as it may do so, amend the company tax
return so that the amount specified is not excessive.

(3) If an officer of Revenue and Customs considers that an undue
amount of relief has been given as a consequence of the amount
25specified being excessive, the officer may make an assessment to tax
in the amount which in the officer’s opinion ought to be charged.

(4) If—

(a) the amount specified became excessive in consequence of an
alteration being made to the amount of group deductions
30allowance allocated to the company for the accounting
period concerned, and

(b) the company has failed, or is unable, to amend its company
tax return in accordance with subsection (2),

an assessment under subsection (3) is not out of time if it is made
35within 12 months of the date on which the alteration took place.

(5) The power in subsection (3) is without prejudice to the power to
make a discovery assessment under paragraph 41(1) of Schedule 18
to FA 1998.

269ZO Meaning of “group”

(1) 40In this Part “group” means two or more companies which together
meet the following condition.

(2) The condition is that one of the companies is—

(a) the ultimate parent of each of the other companies, and

(b) is not the ultimate parent of any other company.

(3) A company (“A”) is the “ultimate parent” of another company (“B”)
if—

(a) A is the parent of B, and

(b) no company is the parent of both A and B.

(4) 5A company (“A”) is the “parent” of another company (“B”) if—

(a) B is a 75% subsidiary of A,

(b) A is beneficially entitled to at least 75% of any profits
available for distribution to equity holders of B, or

(c) A would be beneficially entitled to at least 75% of any assets
10of B available for distribution to its equity holders on a
winding up.

(5) The following apply for the purposes of subsection (4)—

(a) Chapter 6 of Part 5 (equity holders and profits or assets
available for distribution) other than sections 169 to 182, and

(b) 15Chapter 3 of Part 24 (subsidiaries).

This is subject to subsections (6) and (7).

(6) In applying Chapter 3 of Part 24 for the purposes of subsection (4)—

(a) share capital of a registered society is to be treated as if it were
ordinary share capital, and

(b) 20a company (“the shareholder”) that directly owns shares in
another company is to be treated as not owning those shares
if a profit on their sale would be a trading receipt of the
shareholder.

(7) In applying Chapter 6 of Part 5 (other than sections 169 to 182) and
25Chapter 3 of Part 24 for the purposes of subsection (4), they are to be
read with all modifications necessary to ensure that—

(a) they apply to a company which does not have share capital,
and to holders of corresponding ordinary holdings in such a
company, in a way which corresponds to the way they apply
30to companies with ordinary share capital and holders of
ordinary shares in such companies,

(b) they apply to a company which is an unincorporated
association in a way which corresponds to the way they
apply to companies which are bodies corporate,

(c) 35they apply in relation to ownership through an entity (other
than a company), or any trust or other arrangement, in a way
which corresponds to the way they apply to ownership
through a company, and

(d) for the purposes of achieving paragraphs (a) to (c), profits or
40assets are attributed to holders of corresponding ordinary
holdings in unincorporated associations, entities, trusts or
other arrangements in a manner which corresponds to the
way profits or assets are attributed to holders of ordinary
shares in a company which is a body corporate.

(8) 45In this section “corresponding ordinary holding” in an
unincorporated association, entity, trust or other arrangement means
a holding or interest which provides the holder with economic rights
corresponding to those provided by a holding of ordinary shares in
a body corporate”.”

17 (1) Section 269C (overview of Chapter 3 of Part 7A: restriction on banking
company obtaining certain deductions) is amended as follows.

(2) After subsection (1) insert—

“(1A) This Chapter applies in relation to a banking company in addition to
5Part 7ZA (which contains provision restricting the amount of certain
deductions which any kind of company may make in calculating its
taxable total profits for an accounting period).””

(3) In subsection (2) for “269CD” substitute “269CC”

18 (1) Section 269CA (restriction on deductions for pre-1 April 2015 trading losses)
10is amended as follows.

(2) In subsection (2), in the second sentence—

(a) for “269CD” substitute “269ZF”, and

(b) omit “step 5 in”.

(3) In subsection (3), for the words from “where” to the end substitute “in
15relation to a banking company for an accounting period where, in
determining the company’s relevant trading profits for the period, the
amount given by step 1 in section 269ZF(3) is not greater than nil”.

19 (1) Section 269CB (restriction on deductions for pre-1 April 2015 non-trading
deficits from loan relationships) is amended as follows.

(2) 20In subsection (2), in the second sentence—

(a) for “269CD” substitute “269ZF”, and

(b) for “step 6 in subsection (1)” substitute “subsection (2)”.

(3) In subsection (3), for the words from “where” to the end substitute “in
relation to a banking company for an accounting period where, in
25determining the company’s relevant non-trading profits for the period, the
amount given by step 1 in section 269ZF(3) is not greater than nil”

20 (1) Section 269CC (restriction on deductions for pre-1 April 2015 management
expenses etc) is amended as follows.

(2) In subsection (3) for the words from “does not apply” to the end substitute
30“is subject to subsection (8)”.

(3) In subsection (7)—

(a) in the second sentence of step 1, for “269CD” substitute “269ZD(5)”,

(b) in step 2 for the words from “which are” to the end substitute
“under—

“(a) 35section 45 (carry forward of pre-1 April 2017 trade
loss against subsequent trade profits),

(b) section 45B (carry forward of post-1 April 2017 trade
loss against subsequent trade profits), or

(c) section 457 of CTA 2009 (carry forward of pre-1 April
402017 non-trading deficits from loan relationships).””

(4) After subsection (7) insert—

“(8) Subsection (2) does not apply in relation to a banking company for
an accounting period where, in determining the company’s relevant

profits for the period, the amount given by step 1 in section 269ZF(3)
is not greater than nil.””

21 Section 269CD (relevant profits) is omitted.

22 (1) Section 269CN (definitions for the purposes of Part 7A) is amended as
5follows.

(2) In the definition of “relevant non-trading profits” for the words from
“means” to the end substitute “has the meaning given by section 269ZF(2)”.

(3) In the definition of “relevant profits” for the words from “means” to the end
substitute “has the meaning given by section 269ZD(5)”.

(4) 10In the definition of “relevant trading profits” for the words from “means” to
the end substitute “has the meaning given by section 269ZF(1)”.

Part 3 Group relief for carried-forward losses

23 After section 188 of CTA 2010 insert—

15““Part 5A Group relief for carried-forward losses

CHAPTER 1 Introduction

188AA Introduction to Part

(1) This Part—

(a) 20allows a company to surrender losses and other amounts that
have been carried forward to an accounting period of the
company (see Chapter 2), and

(b) enables, in certain cases involving groups or consortiums of
companies, other companies to claim corporation tax relief
25for the losses and other amounts that are surrendered (see
Chapter 3).

(2) Chapters 4 and 5 contain limitations on the amount of corporation
tax relief which may be given on a claim under Chapter 3.

(3) See Chapter 5 for definitions that apply for the purposes of this Part
30and miscellaneous provisions.

(4) The corporation tax relief mentioned in this section is called “group
relief for carried-forward losses.”

CHAPTER 2 Surrender of company's carried-forward losses etc

188BA Overview of Chapter

(1) This Chapter allows a company to surrender losses and other
amounts that have been carried forward to an accounting period of
5the company.

(2) Section 188BB sets out the basic provisions about the surrendering of
losses and other amounts.

(3) Sections 188BC to 188BI place restrictions on the surrendering of
losses and other amounts.

188BB 10 Surrender of carried-forward losses and other amounts

(1) Subsection (2) applies if—

(a) a loss or other amount is carried forward to an accounting
period of a company under any of the following provisions—

(i) section 463G(4) of CTA 2009 (carry forward of post-1
15April 2017 non-trading deficit from loan
relationships);

(ii) section 753(3) of that Act (carry forward of non-
trading loss on intangible fixed assets);

(iii) section 1223 of that Act (carry forward of expenses of
20management of investment business);

(iv) section 45A(4) of this Act (carry forward of post-1
April 2017 trade loss);

(v) sections 62(5)(a) and 63(3)(a) of this Act (carry
forward of loss made in UK property business); or

(b) 25section 303C of this Act (excess carried forward non-
decommissioning losses of ring fence trade: relief against
total profits) applies in relation to an amount.

(2) The company may surrender the loss or other amount under this
Chapter so far as the loss or other amount is eligible for corporation
30tax relief (apart from this Part).

(3) Subsection (4) applies if any of a BLAGAB trade loss made by an
insurance company for an accounting period is carried forward to an
accounting period of the company (“the later period”) under section
124A(2) or 124C(3) of FA 2012.

(4) 35The company may surrender the remaining carried forward amount
under this Chapter so far as that amount is eligible for corporation
tax relief (apart from this Part).

(5) In subsection (4) “the remaining carried forward amount” means so
much of the amount carried forward (as mentioned in subsection (3))
40as cannot be deducted under section 124A(5) or 124C(6) of FA 2012
from the company’s BLAGAB trade profit (if any) of the later period.

(6) Under paragraph 70(1) of Schedule 18 to FA 1998, the company
surrenders losses or other amounts, so far as eligible for surrender
under this Chapter, by consenting to one or more claims for group

relief for carried-forward losses in relation to the amounts (see
requirement 1 in section 188CB(3) and requirement 1 in section
188CC(3)).

(7) In this Part, in relation to losses or other amounts within subsection
5(1) or (4) that a company has carried forward to an accounting
period—

• “the surrenderable amounts” means those losses and other
  amounts so far as eligible for surrender under this Chapter,

• “surrendering company” means the company that has the
  10losses or other amounts,

• “the surrender period” means the accounting period to which
  the losses and other amounts have been carried forward.

(8) See sections 188BC to 188BI for provisions restricting what the
surrendering company may surrender under this section.

188BC 15 Restriction on surrendering pre-1 April 2017 losses etc

(1) The surrendering company may not surrender under this Chapter—

(a) a loss carried forward to the surrender period under section
753(3) of CTA 2009 in so far as the loss is made up of an
amount previously carried forward under that section from
20an accounting period beginning before 1 April 2017,

(b) expenses carried forward to the surrender period under
section 1223 of CTA 2009 if the expenses were first deductible
under section 1219 of that Act for an accounting period
beginning before that date, or

(c) 25a loss carried forward to the surrender period under section
62(5)(a) or 63(3)(a) of this Act if the loss was made in an
accounting period beginning before that date.

(2) The surrendering company may not surrender under this Chapter a
qualifying charitable donation carried forward to the surrender
30period under section 1223 of CTA 2009.

188BD Restriction where investment business has become small or
negligible

(1) The surrendering company may not surrender under this Chapter—

(a) a loss carried forward to the surrender period under section
35753(3) of CTA 2009 if an investment business carried on by
the surrendering company became small or negligible before
the beginning of that period,

(b) expenses carried forward to the surrender period under
section 1223 of CTA 2009 if the surrendering company’s
40investment business became small or negligible before the
beginning of that period, or

(c) a loss carried forward to the surrender period under section
62(5)(a) or 63(3)(a) if the surrendering company’s investment
business became small or negligible before the beginning of
45that period.

(2) In this section—

(a) “company with investment business” has the same meaning
as in Part 18 of CTA 2009 (see section 1218B of that Act);

(b) references to a company’s investment business are to be
construed in accordance with section 1219(2) of CTA 2009.

188BE Restriction where surrendering company could use losses etc itself

The surrendering company may not surrender any losses or other
5amounts under this Chapter if—

(a) section 269ZD(2) applies in determining the taxable total
profits of the surrendering company for the surrender
period, and

(b) the sum of the relevant deductions (within the meaning of
10section 269ZD(3)) made for the surrender period is less than
the maximum permitted by section 269ZD(2).

188BF Restriction where surrendering company has no income-generating
assets

The surrendering company may not surrender any losses or other
15amounts under this Chapter if at the end of the surrender period the
surrendering company has no assets capable of producing income.

188BG Restriction on surrender of losses etc made when UK resident

(1) This section applies in relation to a loss or other amount carried
forward to the surrender period if the surrendering company was
20UK resident during the loss-making period.

(2) The surrendering company may not surrender the loss or other
amount under this Chapter so far as the loss or other amount—

(a) is attributable to a permanent establishment through which
the company carried on a trade outside the UK during the
25loss-making period (see subsection (3)), and

(b) is, or represents, an amount within subsection (5).

(3) A loss or other amount is attributable to a permanent establishment
of the surrendering company if (ignoring this section) the amount
could be included in the company’s surrenderable amounts for the
30surrender period if those amounts were determined—

(a) by reference to that establishment alone, and

(b) by applying, in relation to that establishment, principles
corresponding in all material respects to those mentioned in
subsection (4).

(4) 35The principles are those that would be applied for corporation tax
purposes in determining an equivalent loss or other amount in the
case of a permanent establishment through which a non-UK resident
company carried on a trade in the United Kingdom.

(5) An amount is within this subsection if, for the purposes of non-UK
40tax chargeable under the law of the territory in which the permanent
establishment was situated, the amount is or at any time has been (in
any period) deductible from or otherwise allowable against non-UK
profits of a person other than the surrendering company.

(6) Subsection (7) applies for the purposes of subsection (5) if, in order
45to determine if an amount is or at any time has been deductible or
otherwise allowable for the purposes of non-UK tax chargeable
under the law of a territory, it is necessary under that law to know if