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

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

(b) the claim is based on consortium condition 4

the amount of relief to be given on the claim is limited by subsections
5(2) and (3).

(2) There is a limit on the amount of group relief for carried-forward
losses that can be given, in total, on relevant consortium claims made
by the link company and group companies.

(3) That limit is the maximum amount of group relief for carried-
10forward losses that could be given to the link company on relevant
consortium claims—

(a) assuming that no relevant consortium claims were made by
group companies based on consortium condition 4,

(b) assuming that the link company was UK related, and

(c) 15ignoring any lack of profits of the link company from which
deductions could be made as mentioned in section 188CK(1).

(4) In this section—

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

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

• “relevant consortium claim” means a consortium claim in
  relation to which the surrendering company, the surrender
  25period and the specified loss-making period are the same as
  is the case for the claim mentioned in subsection (1), and

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

188EJ Conditions 3 or 4: surrendering company not controlled by claimant
30company etc

(1) This section applies if—

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

(b) the claim is based on consortium condition 3, and

(c) 35during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
prevent the claimant company, either alone or together with
one or more other companies that are members of the
consortium, from controlling the surrendering company.

(2) 40This section also applies if—

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

(b) the claim is based on consortium condition 4, and

(c) during any part of the overlapping period, arrangements
45within 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 surrendering company.

(3) Arrangements 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 surrendering company, but for the existence of
5the arrangements, and

(b) the 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
10surrenderable amount for the overlapping period were 50% of what
it would be but for this section (see section 188EC(2) to determine the
surrenderable amount for the overlapping period).

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

(6) 15Section 1139 (“tax advantage”) applies for the purposes of this
section.

188EK Conditions 3 or 4: surrendering company in group of companies

(1) This section applies if—

(a) the claimant company makes a claim under section 188CC for
20group relief for carried-forward losses, and

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

(2) The surrendering company’s surrenderable amounts for the
surrender period that are attributable to the specified loss-making
25period are to be treated as reduced (but not below nil) by the relevant
amount.

(3) To determine the relevant amount—

Step 1

Calculate the group’s potential relief.

30Step 2

Multiply the amount arrived at under step 1 by the fraction set out in
subsection (6).

(4) The group’s potential relief is the maximum amount of group relief
for carried-forward losses that could be given if every claim that
35could be made based on the group condition in respect of the
surrenderable amounts for the surrender period was in fact made
(and for this purpose it is to be assumed that the maximum possible
claim is made in each case).

(5) Before determining the maximum amount of potential group relief
40for carried-forward losses under subsection (4), take account of any
claim made before the current claim that—

(a) is a claim for group relief for carried-forward losses based on
the group condition, and

(b) is in relation to losses or other amounts surrendered by a
45member of the same group of companies as the surrendering
company (other than the surrendering company itself).

(6) The fraction mentioned in step 2 in subsection (3) is—

CHAPTER 6 Miscellaneous provisions and interpretation of Part

10Miscellaneous

188FA Payments for group relief for carried-forward losses

(1) This section applies if—

(a) the surrendering company and the claimant company have
an agreement between them in relation to losses and other
15amounts of the surrendering company (“the agreed loss
amounts”),

(b) group relief for carried-forward losses is given to the
claimant company in relation to the agreed loss amounts, and

(c) as a result of the agreement the claimant company makes a
20payment to the surrendering company that does not exceed
the total amount of the agreed loss amounts.

(2) The payment—

(a) is not to be taken into account in determining the profits or
losses of either company for corporation tax purposes, and

(b) 25for corporation tax purposes is not to be regarded as a
distribution.

Interpretation

188FB Subsidiaries, groups and consortiums

Chapter 5 of Part 5 (which explains certain key concepts for the
30purposes of Part 5, including (in particular) how to determine if a
company is a member of a group of companies or is a member of, or
is owned by a consortium) applies for the purposes of this Part as it
applies for the purposes of Part 5.

188FC “Trading company” and “holding company”

(1) 35In this Part “trading company” means a company the business of
which consists wholly or mainly in the carrying on of a trade.

(2) In this Part “holding company” means a company the business of
which consists wholly or mainly in the holding of shares or securities
that—

(a) 40are its 90% subsidiaries, and

(b) are trading companies.

188FD Other definitions

(1) In this Part—

• “the claimant company” has the meaning given by section
  5188CB(2) or 188CC(2),

• “the claim period” has the meaning given by section 188CB(2) or
  188CC(2),

• “company” means any body corporate,

• “group relief for carried-forward losses” has the meaning given
  10by section 188AA(4)

• “profits” means income and chargeable gains, except in so far as
  the context otherwise requires,

• “the specified loss-making period”, in relation to a claim for
  group relief for carried forward losses made under section
  15188CC, has the meaning given by subsection (2) of that
  section,

• “the surrenderable amounts” has the meaning given by section
  188BB(7),

• “surrendering company” has the meaning given by 188BB(7),
  20and

• “the surrender period” has the meaning given by section
  188BB(7).

(2) In this Part, except in so far as the context otherwise requires—

(a) references to a trade include an office, and

(b) 25reference to carrying on a trade include holding an office.””

Part 4 Insurance companies: carrying forward BLAGAB trade losses

24 Chapter 9 of Part 2 of FA 2012 (relief for BLAGAB trade losses) is amended
as follows.

25 (1) 30Section 124 (carry forward of BLAGAB trade losses against subsequent
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) 35In subsection (5), at the end insert “(but see also section 124D)”.

26 After section 124 insert—

“124A Carry forward of post-1 April 2017 BLAGAB trade losses against
subsequent profits

(1) This section applies if—

(a) 40an insurance company carrying on basic life assurance and
general annuity business makes a BLAGAB trade loss for an
accounting period beginning on or after 1 April 2017 (“the
loss-making period”),

(b) relief under—

• section 37 of CTA 2010 (as applied by section 123), or

• section 125 (group relief),

is not given for an amount of the loss (“the unrelieved
5amount”), and

(c) the company continues to carry on basic life assurance and
general annuity business in the next accounting period (“the
later period”).

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

(3) 10Relief for the unrelieved amount is given to the company in the later
period if the company has a BLAGAB trade profit for the later
period.

(4) The relief is given as set out in subsection (5).

(5) For the purposes of—

(a) 15section 93 (minimum profits charge), and

(b) section 104 (policyholders’ rate of tax),

the BLAGAB trade profit of the later period is reduced by the
unrelieved amount (but see also section 124D).

(6) Relief under this section is subject to restriction or modification in
20accordance with section 137(7) of CTA 2010 and other applicable
provisions of the Corporation Tax Acts.

124B Excess carried forward post-1 April 2017 losses: relief against total
profits

(1) This section applies if—

(a) 25an amount of an insurance company’s BLAGAB trade loss
for an accounting period is carried forward to an accounting
period of the company (“the later period”) under section
124A(2) or 124C(3), and

(b) any of that amount (“the unrelieved amount”) is not
30deducted under section 124A(5) or 124C(6) (as the case may
be) from the company’s BLAGAB trade profit (if any) of the
later period.

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

(3) 35If the company makes a claim, the relief is given by deducting the
unrelieved amount, or any part of it specified in the claim, from the
company’s total profits of the later period.

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

(a) within the period of two years after the end of the later
40period, or

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

(5) Relief under this section is subject to restriction or modification in
accordance with section 137(7) of CTA 2010 and other applicable
45provisions of the Corporation Tax Acts.

124C Further carry forward against subsequent profits of post-1 April 2017
loss not fully used

(1) This section applies if—

(a) an amount of an insurance company’s BLAGAB trade loss
5for an accounting period is carried forward to an accounting
period (“the later period”) of the company under section
124A(2) or subsection (3) of this section,

(b) any of that amount is unrelieved in the later period, and

(c) the company continues to carry on basic life assurance and
10general annuity business in the accounting period (“the
further period”) after the later period.

(2) An amount carried forward as mentioned in subsection (1)(a) is
“unrelieved in the later period” so far as it is not—

(a) deducted under section 124A(5) or subsection (6) of this
15section from the company’s BLAGAB trade profit (if any) of
the later period,

(b) deducted from the company’s total profits of the later period
on a claim under 124B, or

(c) surrendered by way of group relief for carried-forward losses
20under Part 5A of CTA 2010.

(3) So much of the amount mentioned in subsection (1)(a) as is
unrelieved in the later period is carried forward to the further period.

(4) Relief for the amount carried forward under subsection (3) (“the
remaining carried forward amount”) is given to the company in the
25further period if the company has a BLAGAB trade profit for that
period.

(5) The relief is given as set out in subsection (6).

(6) For the purposes of—

(a) section 93 (minimum profits charge), and

(b) 30section 104 (policyholders’ rate of tax),

the BLAGAB trade profit of the further period is reduced by the
remaining carried forward amount (but see also section 124D).

(7) Relief under this section is subject to restriction or modification in
accordance with section 137(7) of CTA 2010 and other applicable
35provisions of the Corporation Tax Acts.

124D Restriction on deductions from BLAGAB trade profits

(1) The sum of any deductions made by a company for an accounting
period under sections 124(5), 124A(5) and 124C(6) may not exceed
the relevant maximum.

40But this is subject to subsection (6).

(2) In this section the “relevant maximum” means the sum of—

(a) 50% of the company’s relevant BLAGAB trade profits for the
accounting period, and

(b) the company’s BLAGAB trade profits deductions allowance
45for the accounting period.

(3) A company’s “relevant BLAGAB trade profits” for an accounting
period are—

(a) the company’s BLAGAB trade profit for the accounting
period, less

(b) 5the company’s BLAGAB trade profits deductions allowance
for the accounting period.

But if the allowance mentioned in paragraph (b) exceeds the profit
mentioned in paragraph (a), the company’s “relevant BLAGAB trade
profits” for the accounting period are nil.

(4) 10A company’s “BLAGAB trade profits deductions allowance” for an
accounting period—

(a) is so much of the company’s deductions allowance for the
period as is specified in the company’s tax return as its
BLAGAB trade profits deductions allowance for the period,
15and

(b) accordingly, is nil if no amount of the company’s deductions
allowance for the period is so specified.

(5) An amount specified under subsection (4)(a) as a company’s
BLAGAB trade profits deductions allowance for an accounting
20period may not exceed the difference between—

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

(b) the total of any amounts specified for the period under
sections 269ZB(7)(a) of CTA 2010 (trading profits deduction
25allowance) and 269ZC(5)(a) of CTA 2010 (non-trading profits
deduction allowance).

(6) Subsection (1) does not apply to a company for an accounting period
if the company’s BLAGAB trade profit for the accounting period is
not greater than nil.

(7) 30Section 269ZB(9) of CTA 2010 gives the meaning of “deductions
allowance” in relation to a company and an accounting period.””

Part 5 Carrying forward trade losses in certain creative industries

Losses of film trade

27 35Chapter 4 of Part 15 of CTA 2009 (losses of separate film trade) is amended
as follows.

28 (1) Section 1209 (restriction on use of losses while film in production) is
amended as follows.

(2) In subsection (2)—

(a) 40after “45” insert “or 45B”, and

(b) for “set against” substitute “deducted from”.

(3) After subsection (2) insert—

“(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate film trade in a subsequent

period, the deduction is to be ignored for the purposes of section
269ZB of CTA 2010 (restriction on deductions from trading profits).””

29 (1) Section 1210 (use of losses in later periods) is amended as follows.

(2) In subsection (2) after “45” insert “or 45B”.

(3) 5In subsection (3) for “loss relief” substitute “section 37 and Part 5 of CTA
2010”.

(4) In subsection (4) for “Subsection (5) applies” substitute “Subsections (5) and
(5A) apply”.

(5) In subsection (5) after paragraph (a) insert—

“(ab) 10carried forward under section 45A of that Act to be deducted
from the total profits of a later period,””

(6) After subsection (5) insert—

“(5A) A deduction under section 45 or 45B of CTA 2010 which is made in
respect of so much of the loss as is attributable to film tax relief is to
15be ignored for the purposes of section 269ZB of that Act (restriction
on deductions from trading profits).””

30 (1) Section 1211 (terminal losses) is amended as follows.

(2) In subsection (1)(c)—

(a) after “45” insert “, 45A or 45B”, and

(b) 20omit “trade X in”.

(3) In subsection (3) for the words after “treated” to the end substitute “—

(a) in a case where the loss could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
25against the profits of trade Y of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Y which has been carried
30forward under section 45B of that Act to the first accounting
period beginning after the cessation.””

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) in a case where the amount could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
35were a loss carried forward under that section to be set
against the profits of trade Z of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
40as if it were a loss made in trade Z which has been carried
forward under section 45B of that Act to the first accounting
period beginning after the cessation.””

(5) After subsection (7) insert—

“(7A) A deduction under section 45 or 45B of CTA 2010 which is made in
reliance on this section is to be ignored for the purposes of section
269ZB of that Act (restriction on deductions from trading profits).””

5Losses of television programme trade

31 Chapter 4 of Part 15A of CTA 2009 (losses of separate television programme
trade) is amended as follows.

32 (1) Section 1216DA (restriction on use of losses while programme in
production) is amended as follows.

(2) 10In subsection (2)—

(a) after “45” insert “or 45B”, and

(b) for “set against” substitute “deducted from”.

(3) After subsection (2) insert—

“(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
15deducted from profits of the separate programme trade in a
subsequent period, the deduction is to be ignored for the purposes of
section 269ZB of CTA 2010 (restriction on deductions from trading
profits).””

33 (1) Section 1216DB (use of losses in later periods) is amended as follows.

(2) 20In subsection (2) after “45” insert “or 45B”.

(3) In subsection (3) for “loss relief” substitute “section 37 and Part 5 of CTA
2010”.

(4) In subsection (4) for “Subsection (5) applies” substitute “Subsections (5) and
(5A) apply”.

(5) 25In subsection (5) after paragraph (a) insert—

“(ab) carried forward under section 45A of that Act to be deducted
from the total profits of a later period,””

(6) After subsection (5) insert—

“(5A) A deduction under section 45 or 45B of CTA 2010 which is made in
30respect of so much of the loss as is attributable to television tax relief
is to be ignored for the purposes of section 269ZB of that Act
(restriction on deductions from trading profits).””

34 (1) Section 1216DC (terminal losses) is amended as follows.

(2) In subsection (1)(c)—

(a) 35after “45” insert “, 45A or 45B”, and

(b) omit “trade X in”.

(3) In subsection (3) for the words after “treated” to the end substitute “—

(a) in a case where the loss could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
40were a loss carried forward under that section to be set
against the profits of trade Y of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Y which has been carried
forward under section 45B of that Act to the first accounting
5period beginning after the cessation.””

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) in a case where the amount could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
10against the profits of trade Z of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Z which has been carried
15forward under section 45B of that Act to the first accounting
period beginning after the cessation.””

(5) After subsection (7) insert—

“(7A) A deduction under section 45 or 45B of CTA 2010 which is made in
reliance on this section is to be ignored for the purposes of section
20269ZB of that Act (restriction on deductions from trading profits).””

Losses of video game trade

35 Chapter 4 of Part 15B of CTA 2009 (losses of separate video game trade) is
amended as follows.

36 (1) Section 1217DA (restriction on use of losses while video game in
25development) is amended as follows.

(2) In subsection (2)—

(a) after “45” insert “or 45B”, and

(b) for “set against” substitute “deducted from”.

(3) After subsection (2) insert—

“(3) 30If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate video game trade in a
subsequent period, the deduction is to be ignored for the purposes of
section 269ZB of CTA 2010 (restriction on deductions from trading
profits).””

37 (1) 35Section 1217DB (use of losses in later periods) is amended as follows.

(2) In subsection (2) after “45” insert “or 45B”.

(3) In subsection (3) for “loss relief” substitute “section 37 and Part 5 of CTA
2010”.

(4) In subsection (4) for “Subsection (5) applies” substitute “Subsections (5) and
40(5A) apply”.

(5) In subsection (5) after paragraph (a) insert—

“(ab) carried forward under section 45A of that Act to be deducted
from the total profits of a later period,””