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

Determine the previously claimed amount of group relief for carried
forward losses in relation to the prior claim (see subsection (4)).

(4) To determine the previously claimed amount of group relief for
5carried-forward losses in relation to a prior claim—

(a) take the proportion of the overlapping period for the prior
claim that is included in the common period identified at
Step 2 in relation to that claim, and

(b) apply that proportion to the amount of group relief for
10carried-forward losses given on the prior claim.

The previously claimed amount of group relief for carried-forward
losses in relation to the prior claim is the amount given as a result of
paragraph (b).

188DF Sections 188DC to 188DE: supplementary

(1) 15If two or more claims for group relief for carried-forward losses are
made at the same time, for the purpose of section 188DC and 188DE
treat the claims as made—

(a) in such order as the company making them may elect or the
companies making them may jointly elect, or

(b) 20if no such election is made, in such order as an officer of
Revenue and Customs may direct.

(2) For the purpose of Step 3 in each of section 188DC(5) and 188DE(3)
the amount of group relief for carried-forward losses given on a prior
claim is determined on the basis that relief is given on the claim
25before it is given on any later claim.

(3) If the use of any proportion mentioned in subsection (4), would, in
the circumstances of a particular case, produce a result that is unjust
or unreasonable, the proportion is to be modified so far as necessary
to produce a result that is just and reasonable.

(4) 30The proportions are those found in—

(a) section 188DC(2),

(b) section 188DC(6),

(c) step 3 in section 188DD(1), and

(d) section 188DE(4)

188DG 35 Sections 188DC and 188DE: meaning of “the overlapping period”

(1) In sections 188DC and 188DE “the overlapping period”, in relation to
a claim for group relief for carried-forward losses, means the period
that is common to the claim period and the surrender period (see
Requirement 2 in section 188CB(3) and Requirement 2 in section
40188CC(3)).

(2) But if during any part of the overlapping period the relief condition
is not met, that part is treated as not forming part of the overlapping
period but instead as forming—

(a) a part of the surrender period that is not included in the
45overlapping period, and

(b) a part of the claim period that is not included in the
overlapping period.

(3) The relief condition is the condition on which the claim for group
relief for carried forward losses is based, that is—

• the group condition,

• consortium condition 1,

• 5consortium condition 2,

• consortium condition 3, or

• consortium condition 4.

Further limitations on amount of relief if claim based on consortium conditions 1 or
2

188DH 10 Condition 1: ownership proportion

(1) This section applies if—

(a) the claimant company makes a claim under section 188CB for
group relief for carried-forward losses, and

(b) the claim is based on consortium condition 1.

(2) 15The relief to be given on the claim is limited to the ownership
proportion of the claimant company’s relevant profits for the
overlapping period (see section 188DD to determine the claimant
company’s relevant profits for the overlapping period).

(3) The ownership proportion is the same as the lowest of the following
20proportions prevailing during the overlapping period—

(a) the proportion of the ordinary share capital of the claimant
company that is beneficially owned by the surrendering
company,

(b) the proportion of any profits available for distribution to
25equity holders of the claimant company to which the
surrendering company is beneficially entitled,

(c) the proportion of any assets of the claimant company
available for distribution to such equity holders on a winding
up to which the surrendering company would be beneficially
30entitled, and

(d) the proportion of the voting power in the claimant company
that is directly possessed by the surrendering company.

(4) If any of the proportions in subsection (3) changes during the
overlapping period, use the average of that proportion during that
35period.

(5) If the claimant company is owned by the consortium company as a
result of section 153(3) (consortium company involving holding
companies), references in subsection (3) to the claimant company are
to be read as references to the holding company in question.

(6) 40In this section “the overlapping period” is to be read in accordance
with section 188DG.

(7) Chapter 6 of Part 5 (equity holders and profits or assets available for
distribution) applies for the purposes of subsection (3)(b) and (c).

188DI Condition 2: ownership proportion

(1) 45This section applies if—

(a) the claimant company makes a claim under section 188CB for
group relief for carried-forward losses, and

(b) the claim is based on consortium condition 2.

(2) The limitation on relief in section 188DH applies in relation to the
5claim, but for this purpose references in section 188DH(3) to the
surrendering company are to be read as reference to the link
company.

188DJ Condition 2: companies in link company’s group

(1) Where—

(a) 10the claimant company makes a claim under section 188CB,
and

(b) the claim is based on consortium condition 2,

the amount of relief to be given on the claim is limited by subsections
(2) and (3).

(2) 15There is a limit on the amount of group relief for carried-forward
losses that can be given, in total, to the claimant company for the
claim period on consortium claims made in relation to losses and
other amounts surrendered by the link company and group
companies.

(3) 20That limit is the same as the limit that, as a result of section 188DH(2),
would apply for the purposes of a consortium claim made by the
claimant company for the claim period in relation to losses or other
amounts surrendered by the link company, assuming that the link
company was UK related.

(4) 25In determining the limit that would apply as a result of section
188DH(2) it is to be assumed that the accounting period of the link
company is the same as the accounting period of the claimant
company.

(5) In this section—

• 30“consortium claim” means a claim for group relief for carried-
  forward losses under section 188CB,

• “group company” means a company that is a member of the
  same group of companies as the link company (other than the
  link company itself), and

• 35“UK related”, in relation to a company, has the meaning given
  by section 188CJ.

188DK Condition 1 and 2: claimant company not controlled by surrendering
company etc

(1) This section applies if—

(a) 40the claimant company makes a claim under section 188CB for
group relief for carried-forward losses,

(b) the claim is based on consortium condition 1, and

(c) during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
45prevent the surrendering company, either alone or together
with one or more other companies that are members of the
consortium, from controlling the claimant company.

(2) This section also applies if—

(a) the claimant company makes a claim under section 188CB for
group relief for carried-forward losses,

(b) the claim is based on consortium condition 2, and

(c) 5during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
prevent the link company, either alone or together with one
or more other companies that are members of the
consortium, from controlling the claimant company.

(3) 10Arrangements are within this subsection if—

(a) the company, either alone or together with one or more other
companies that are members of the consortium, would
control the claimant company, but for the existence of the
arrangements, and

(b) 15the arrangements form part of a scheme the main purpose, or
one of the main purposes, of which is to enable the claimant
company to obtain a tax advantage under this Chapter.

(4) The relief to be given on the claim is to be determined as if the
claimant company’s relevant profits for the overlapping period were
2050% of what they would be but for this section (see section 188DD to
determine the claimant company’s relevant profits for the
overlapping period).

(5) In this section “the overlapping period” is to be read in accordance
with section 188DG

(6) 25Section 1139 (“tax advantage”) applies for the purposes of this
section.

188DL Conditions 1 and 2: claimant company in group of companies

(1) This section applies if—

(a) the claimant company makes a claim under section 188CB
30based on consortium condition 1 or 2, and

(b) the claimant company is a member of a group of companies.

(a)(a)the claimant company makes a claim under section 188CB
based on consortium condition 1 or 2, and

(b) the claimant company is a member of a group of companies.

(2) 35In determining the claimant company’s relevant profits for the
overlapping period under section 188DD, both of the amounts
calculated at step 1 of that section are to be treated as reduced (but
not below nil) by the group’s potential relief.

(3) The group’s potential relief is the sum of—

(a) 40the maximum amount of group relief for carried-forward
losses that could be claimed by the claimant company for the
claim period on claims under section 188CB based on the
group condition, and

(b) the maximum amount of group relief under Part 5 that could
45be claimed by the claimant company for the claim period on
claims under section 130 based on the group condition.

(4) Before determining the maximum amount of potential group relief
for carried-forward losses or potential group relief under subsection
(3) take account of any claim made before the claim mentioned in
50subsection (1) that—

(a) is a claim for group relief or group relief for carried-forward
losses based on the group condition made by another
member of the same group of companies as the claimant
company, and

(b) 5is in relation to losses or other amounts surrendered.

CHAPTER 5 Limitations on relief: claims under section 188CC

Introduction

188EA Overview of Chapter

This Chapter sets out limitations on the amount of relief which may
10be given on a claim under section 188CC.

General limitation on amount of relief

188EB Limitation on amount of relief applying to all claims under section
188CC

(1) The amount of group relief for carried-forward losses to be given on
15a claim under section 188CC (“the current claim”) is limited to
whichever is the lesser of—

(a) the amount mentioned in subsection (2),

(b) the amount mentioned in subsection (3), and

(c) the amount mentioned in subsection (4).

(2) 20The amount referred to in subsection (1)(a) is the unused part of the
surrenderable amounts that are attributable to the specified loss-
making period (see section 188EC).

(3) The amount referred to in subsection (1)(b) is the difference
between—

(a) 25the claimant company’s relevant profits for the overlapping
period (see section 188ED), and

(b) the amount of previously claimed group relief for carried-
forward losses for the overlapping period (see section
188EE).

(4) 30The amount referred to in subsection (1)(c) is the potential Part 5
group relief amount (see section 188EF).

188EC Unused part of surrenderable amounts attributable to specified loss-
making period

(1) The unused part of the surrenderable amounts that are attributable
35to the specified loss-making period is the amount equal to—

(a) the surrenderable amount for the overlapping period (see
subsection (2)), less

(b) the amount of prior surrenders for that period (see
subsections (3) to (5)).

(2) 40To determine the surrenderable amount for the overlapping
period—

(a) take the proportion of the surrender period included in the
overlapping period, and

(b) apply that proportion to the surrenderable amounts for the
surrender period that are attributable to the specified loss-
5making period.

The surrenderable amount for the overlapping period is the amount
given as a result of paragraph (b).

(3) To determine the amount of prior surrenders for the overlapping
period—

(a) 10identify any prior claims for the purposes of this section (see
subsection (4)), and

(b) take the steps set out in subsection (5) in relation to each such
claim.

The amount of prior surrenders for the overlapping period is the
15total of the previously used amounts given at Step 3 in subsection (5)
for all the prior claims.

(4) A claim is a prior claim for the purposes of this section if—

(a) it is either—

(i) a claim under section 188CB by any company which
20relates to the amounts to which the current claim
relates (as well as any other amounts), or

(ii) a claim under section 188CC by any company which
relates to the same amounts to which the current
claim relates,

(b) 25it is made before the current claim, and

(c) it has not been withdrawn.

(5) These are the steps referred to in subsection (3)(b) to be taken in
relation to each prior claim.

Step 1

30Identify the overlapping period for the prior claim.

Step 2

Identify any period that is common to the overlapping period for the
current claim and the overlapping period for the prior claim.

If there is a common period, go to Step 3.

35If there is no common period, there is no previously used amount in
relation to the prior claim (and ignore Step 3).

Step 3

Determine the previously used amount of group relief for carried-
forward losses in relation to the prior claim (see subsections (6) to
40(8)).

(6) To determine the previously used amount of group relief for carried-
forward losses in relation to a prior claim made under section
188CB—

Step 1

45Take the proportion of the overlapping period for the prior claim
that is included in the common period identified at step 2 in
subsection (5) in relation to that claim.

Step 2

Apply that proportion to the amount of group relief for carried-
forward losses given on the claim.

Step 3

5Multiply the amount arrived at under step 2 by the fraction set out in
subsection (7).

(7) The fraction is—

(8) To determine the previously used amount of group relief for carried-
forward losses in relation to a prior claim made under section
15188CC—

(a) take the proportion of the overlapping period for the prior
claim that is included in the common period identified at
Step 2 in subsection (5) in relation to that claim, and

(b) apply that proportion to the amount of group relief for
20carried-forward losses given on the prior claim.

The previously used amount of group relief for carried-forward
losses in relation to the prior claim is the amount given as a result of
paragraph (b).

188ED Claimant company’s relevant profits for the overlapping period

(1) 25The claimant company’s relevant profits for the overlapping period
are determined as follows—

Step 1

Calculate—

• the claimant company’s relevant profits for the claim period
  30in accordance with section 269ZD(5), and

• the claimant company’s relevant maximum for the claim
  period in accordance with section 269ZD(4).

Step 2

Take whichever is the lesser of the amounts calculated at Step 1 and
35deduct from that amount the sum of—

• any deductions made by the company for the claim period

  • “(i)

    under section 45(4)(b) or 45B(4), or

    (ii)

    under section 303B or 303D by virtue of section 304(5),”

• any deduction made by the company for the claim period
  40under section 457(3) of CTA 2009,

• any deductions made by the company for the claim period
  under section 124(5), 124A(5) or 124C(6) of FA 2012, and

• any deductions made by the company for the claim period
  which are deductions within any of paragraphs (a) to (k) of
  45section 269ZD(3).

Step 3

Take the proportion of the claim period included in the overlapping
period and apply that proportion to the amount arrived at under
step 2.

(2) 5If section 269ZD has effect in relation to the claimant company for the
claim period with the modifications set out in section 269ZE(1)
(special loss cap for insurance companies in certain cases), subsection
(1) has effect as if steps 1 and 2 were modified as follows—

Step 1

10Determine, in accordance with section 269ZE(5), the modified loss
cap for the claimant company and the claim period.

Step 2

Reduce that amount by the total of any deductions made by the
claimant company for the claim period which are deductions within
15any of paragraphs (a) to (k) of section 269ZD(3).

188EE Previously claimed group relief for carried-forward losses

(1) To determine the amount of previously claimed group relief for
carried-forward losses for the overlapping period—

(a) identify any prior claims for the purposes of this section (see
20subsection (2)), and

(b) take the steps set out in subsection (3) in relation to each such
claim.

The amount of previously claimed group relief for carried-forward
losses for the overlapping period is the total of the previously
25claimed amounts given at Step 3 in subsection (3) for all the prior
claims.

(2) A claim is a prior claim for the purposes of this section if—

(a) it is a claim under section 188CB or 188CC by the claimant
company for group relief for carried-forward losses which
30would be given by way of a deduction from the company’s
total profits of the claim period,

(b) it is made before the current claim, and

(c) it has not been withdrawn.

(3) These are the steps referred to in subsection (1)(b) to be taken in
35relation to 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 for the
40current claim and the overlapping period for the prior claim.

If there is a common period, go to Step 3.

If there is no common period, there is no previously claimed amount
in relation to the prior claim (and ignore Step 3).

Step 3

45Determine the previously claimed amount of group relief for carried
forward losses in relation to the prior claim (see subsection (4)).

(4) To determine the previously claimed amount of group relief for
carried-forward losses in relation to a prior claim—

(a) take the proportion of the overlapping period for the prior
claim that is included in the common period identified at
Step 2 in subsection (3) in relation to that claim, and

(b) apply that proportion to the amount of group relief for
5carried-forward losses given on the prior claim.

The previously claimed amount of group relief for carried-forward
losses in relation to the prior claim is the amount given as a result of
paragraph (b).

188EF The potential Part 5 group relief amount

(1) 10The potential Part 5 group relief amount is determined as follows—

Step 1

Calculate the maximum amount of group relief that could have been
given to the claimant company under Part 5 in relation to losses or
other amounts within section 99(1) which the surrendering company
15had for the specified loss-making period.

In applying this step, ignore any lack of profits of the claimant
company from which deductions could have been made as
mentioned in section 137(1).

Step 2

20Deduct from the amount arrived at under step 1 the amount of any
group relief actually given to the claimant company under Part 5 in
relation to losses or other amounts within section 99(1) which the
surrendering company had for the specified loss-making period.

Step 3

25Multiply the amount arrived at following step 2 by the fraction in
subsection (2).

Step 4

Deduct from the amount arrived at following step 3 any group relief
for carried-forward losses previously given to the claimant company
30on claims under section 188CC which are related to the current claim.

(2) The fraction referred to in step 3 is—

where—

• A is the sum of the losses or other amounts within section
  3599(1)(a), (c), (e), (f) and (g) which the surrendering company
  had for the specified loss-making period, and

• B is the sum of the losses or other amounts within section 99(1)
  (a) to (g) which the surrendering company had for the
  specified loss-making period.

(3) 40References in subsection (2) to losses or other amounts are references
to losses or other amounts only in so far as they were eligible for
surrender under Chapter 2 of Part 5.

(4) A claim under section 188CC is related to the current claim if the
surrendering company and the specified loss-making period are the
45same in relation to both claims.

188EG Sections 188EC to 188EE: supplementary

(1) If two or more claims for group relief for carried-forward losses are
made at the same time, for the purpose of section 188EC and 188EE
treat the claims as made—

(a) 5in such order as the company making them may elect or the
companies making them may jointly elect, or

(b) if no such election is made, in such order as an officer of
Revenue and Customs may direct.

(2) For the purpose of Step 3 in each of sections 188EC(5) and 188EE(3)
10the amount of group relief for carried-forward losses given on a prior
claim is determined on the basis that relief is given on the claim
before it is given on any later claim.

(3) If the use of any proportion mentioned in subsection (4), would, in
the circumstances of a particular case, produce a result that is unjust
15or unreasonable, the proportion is to be modified so far as necessary
to produce a result that is just and reasonable.

(4) The proportions are those found in—

(a) section 188EC(2)(a),

(b) step 1 in section 188EC(6),

(c) 20section 188EC(8)(a),

(d) step 3 in section 188ED(1), and

(e) section 188EE(4)(a).

188EH Sections 188EC and 188EE: meaning of “the overlapping period”

(1) In sections 188EC and 188EE “the overlapping period”, in relation to
25a claim for group relief for carried-forward losses, means the period
that is common to the claim period and the surrender period (see
Requirement 2 in section 188CB(3) and Requirement 2 in section
188CC(3)).

(2) But if during any part of the overlapping period the relief condition
30is not met, that part is treated as not forming part of the overlapping
period but instead as forming—

(a) a part of the surrender period that is not included in the
overlapping period, and

(b) a part of the claim period that is not included in the
35overlapping period.

(3) The relief condition is the condition on which the claim for group
relief for carried forward losses is based, that is—

• the group condition,

• consortium condition 1,

• 40consortium condition 2,

• consortium condition 3, or

• consortium condition 4.

Further limitations on amount of relief that apply in particular cases

188EI Condition 4: companies in link company’s group

(1) 45Where—