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

Finance (No. 2) BillPage 370

(i) begins to carry on a trade in the deemed loss-making
period which it continues to carry on in the following
accounting period, or

(ii) begins to carry on a trade in an accounting period
5after the deemed-loss making period, and

(c) the trade is derived from the research and development in
relation to which the relief mentioned in subsection (1) was
obtained.

(4B) In that case, so far as—

(a) 10the company has not obtained relief in respect of the trading
loss under any other provision, and

(b) the loss has not been surrendered under Part 5 of CTA 2010
(group relief) (surrender of relief to group or consortium
members),

15the trading loss is to be treated as if it were a loss of that trade
brought forward under the relevant provision (see subsection (4C))
to the relevant period (see subsection (4D).

(4C) In subsection (4B) “the relevant provision” is—

(a) section 45A(4) of CTA 2010 if—

(i) 20the trade is not a ring fence trade within the meaning
of Part 8 of CTA 2010 (see section 277 of that Act), and

(ii) relief under section 37 of CTA 2010 would not be
unavailable by reason of section 44 of that Act for a
loss (assuming there was one) made in the trade in the
25relevant period (see subsection (4D), and

(b) section 45B(2) of CTA 2010 if either of the conditions in
paragraph (a) is not met.

(4D) In subsection (4B) and (4C) “the relevant period” means—

(a) in a case where the company began the trade in the deemed
30loss-making period and continued to carry on the trade in the
following accounting period, that following accounting
period, and

(b) in a case where the company began the trade in an accounting
period after the deemed loss-making period, the accounting
35period in which the company began the trade.”

(5) In subsection (5) for “Subsection (4) is” substitute “Subsections (4) and (4B)
are”.

118 In section 1056 (amount of trading loss which is “unrelieved”)—

(a) in subsection (2)(c) after “Part 5” insert “or Part 5A”, and

(b) 40in subsection (3)(a) after “45” insert “, 45A or 45B”.

119 In section 1062(2) (restriction on losses carried forward where R&D tax
credit claimed)—

(a) for “section 45” substitute “sections 45, 45A and 45B”, and

(b) omit “trading” in the second place that word occurs.

120 45In section 1116 (meaning of “the actual reduction in tax liability”) in
subsection (4) after “Part 5” insert “or Part 5A”.

121 In section 1153 (amount of loss which is “unrelieved”)—

Finance (No. 2) BillPage 371

(a) in subsection (1)(c) after “Part 5” insert “or Part 5A”, and

(b) in subsection (2)(a) after “45” insert “, 45A, 45B”.

122 In section 1158(2) (restriction on losses carried forward where land
remediation tax credit claimed)—

(a) 5for “section 45” substitute “sections 45, 45A and 45B”, and

(b) omit “trading” in the second place that word occurs.

123 In section 1201 (film tax credit claimable if company has surrenderable loss)
in subsection (2B)(b) after “45” insert “or 45B”.

124 In section 1216CH (television tax credit claimable if company has
10surrenderable loss) in subsection (4)(b) after “45” insert “or 45B”.

125 In section 1217CH (video game tax credit claimable if company has
surrenderable loss) in subsection (4)(b) after “45” insert “or 45B”.

126 In section 1217KA (theatre tax credits: amount of surrenderable loss) in
subsection (3)(b) after “45” insert “or 45B”.

127 15In section 1217RH (orchestra tax credits: amount of surrenderable loss) in
subsection (3)(b) after “45” insert “or 45B”.

128 In section 1223 (carry forward expenses of management and other amounts),
in subsection (1)(b), after sub-paragraph (i) (as inserted by paragraph
6(2)(b)) insert—

(“ii) 20section 269ZD of CTA 2010 (restrictions on
deductions from total profits) has effect for the
accounting period, or

(iii) ”.

CTA 2010

129 25CTA 2010 is amended as follows.

130 (1) Section 1 (overview of Act) is amended as follows.

(2) In subsection (2) (list of reliefs provided by Parts 4 to 7) after paragraph (f)
insert—

(fa) group relief for carried-forward losses (see Part 5A),”

(3) 30After subsection (2) insert—

(2A) Part 7ZA contains provision restricting the amount of certain
deductions which may be made in calculating the profits of a
company on which corporation tax is chargeable.”

131 (1) Section 17 (interpretation of Chapter 4 of Part 2) is amended as follows.

(2) 35In subsection (2) (meaning of “carried-back amount”)—

(a) after paragraph (a) insert—

(aa) an amount carried back under section 45F (relief for
terminal trade losses),”, and

(b) in paragraph (c) after “459(1)(b)” insert “or 463B(1)(b)”.

(3) 40In subsection (3) (meaning of “carried-forward amount”)—

(a) in paragraph (a) after “forward of” insert “pre-1 April 2017”,

Finance (No. 2) BillPage 372

(b) after paragraph (a) insert—

(aa) an amount carried forward under section 45A (carry
forward of post 1-April 2017 trade loss against total
profits),

(ab) 5an amount carried forward under section 45B (carry
forward of post-1 April 2017 trade loss against
subsequent trade profits),”, and

(c) in paragraph (i) after “457(3)” insert “, 463G(4) or 463H(3)”.

132 (1) Section 46 (use of trade-related interest and dividends if insufficient trade
10profits) is amended as follows.

(2) For subsection (1) substitute—

(1) This section applies if in an accounting period a company carrying
on a trade makes a loss in the trade and either—

(a) relief for the loss could be given in a later accounting period
15under section 45(4)(b) or 45B(4) but for the fact that there are
no profits of the trade of the later accounting period, or

(b) the amount of relief for the loss that could be given in a later
accounting period under section 45(4)(b) or 45B(4) is limited
by reason of the amount of profits of the trade of the later
20accounting period.”

(3) In subsection (2) at the beginning insert “For the purposes of section 45 and
45B,”.

133 In section 47 (registered societies), in subsection (1), for “section 45”
substitute “sections 45 and 45B”.

134 25In section 53 (leasing contracts and company reconstructions), in subsection
(1)(e), for “or 45” substitute “, 45, 45A or 45B”.

135 In section 54 (non-UK resident company: receipts of interest, dividends or
royalties), in subsection (2), for “or 45” substitute “, 45, 45A or 45B”.

136 (1) Section 56 (restriction on reliefs for limited partners) is amended as follows.

(2) 30In subsection (2)—

(a) in paragraph (a) after “37” insert “or 45A”,

(b) omit “or” at the end of paragraph (a), and

(c) after paragraph (b) insert , or

(c) under Part 5A (group relief for carried-forward
35losses)”.

(3) In subsection (4)—

(a) after “37” insert “or 45A”, and

(b) after “5” insert “or 5A”.

137 (1) Section 59 (restriction on relief for members of LLPs) is amended as follows.

(2) 40In subsection (2)—

(a) in paragraph (a) after “37” insert “or 45A”,

(b) omit “or” at the end of paragraph (a), and

(c) after paragraph (b) insert , or

(c) under Part 5A (group relief for carried-forward
45losses)”.

Finance (No. 2) BillPage 373

(3) In subsection (4)—

(a) after “37” insert “or 45A”, and

(b) after “5” insert “or 5A”.

138 (1) Section 61 (unrelieved losses of member of LLP brought forward) is
5amended as follows.

(2) In subsection (1), in the words before paragraph (a), for “This section”
substitute “Subsection (2)”.

(3) After subsection (2) insert—

(2A) Subsection (2B) applies if—

(a) 10a company (“the member company”) carries on a trade as a
member of an LLP at a time during an accounting period
(“the current period”), and

(b) as a result of section 59, relief under section 45A or Part 5A
(group relief for carried forward losses) has not been given
15for an amount of loss made in the trade by the member
company as a member of the LLP in a previous accounting
period.

(2B) For the purposes of determining the relief under section 45A or Part
5A to be given to any company, the amount of loss is treated as
20having been made by the member company in the current period so
far as it is not excluded by subsection (3) or (4).”

(4) In subsection (3)—

(a) after “37” insert “or 45A”, and

(b) after “Part 5” insert “or Part 5A”.

139 (1) 25Chapter 4 of Part 4 (property losses) is amended as follows.

(2) In section 65 (UK furnished holiday lettings business treated as trade) for
subsection (4A) substitute—

(4A) Chapter 2 applies as if the following were omitted—

(a) sections 37 to 44,

(b) 30the words “beginning before 1 April 2017” in section 45(1),

(c) sections 45A to 45H, and

(d) sections 48 to 54.

(4B) Any deduction made under section 45(4)(b) from the profits of the
trade treated as carried on under this section is to be ignored for the
35purposes of section 269ZB (restriction on deductions from trading
profits).”

(3) In section 67A (EEA furnished holiday lettings business treated as trade) for
subsection (5) substitute—

(5) Chapter 2 applies as if the following were omitted—

(a) 40sections 37 to 44,

(b) the words “beginning before 1 April 2017” in section 45(1),

(c) sections 45A to 45H, and

(d) sections 48 to 54.

Finance (No. 2) BillPage 374

(5A) Any deduction made under section 45(4)(b) from the profits of the
trade treated as carried on under this section is to be ignored for the
purposes of section 269ZB (restriction on deductions from trading
profits).”

140 (1) 5Section 95 (write-off of government investment: meaning of “carry forward
losses”) is amended as follows.

(2) In subsection (1), in Type 1, after “45,” insert “45A, 45B,”.

(3) In subsection (2) after “(group relief)” insert “or Part 5A (group relief for
carried forward losses)”.

141 10In section 104 (meaning of “non-trading loss on intangible fixed assets” for
purposes of section 99(1)(g)), for subsection (2) substitute—

(2) But it does not include a loss treated as a non-trading loss on
intangible fixed assets for the surrender period as a result of section
753(3) of CTA 2009.”

142 15In section 137 (giving of group relief: deduction from total profits) in
subsection (5) (list of deductions to be made after group relief is given)—

(a) omit “and” at the end of paragraph (b),

(b) in paragraph (c) for “or 459” substitute “, 459 or 463B”, and

(c) after paragraph (c) insert , and

(d) 20under section 188CK (giving of group relief for
carried-forward losses: deductions from total
profits)”.

143 In section 189(2) (relief for qualifying charitable donations) at the end insert
“and group relief for carried-forward losses”.

144 25In section 269DA (surcharge on banking companies) in subsection (2)
(calculation of “surcharge profits”)—

(a) in the formula, after “NBGR+” insert “NBGRCF+”, and

(b) after the definition of “NBGR” insert—

  • “NBGRCF” is the amount (if any) of non-banking group
    30relief for carried-forward losses that is given in
    determining those taxable total profits (see section
    269DBA);”.

145 After section 269DB insert—

269DBA Meaning of “non-banking group relief for carried-forward losses”

(1) 35In section 269DA(2) “non-banking group relief for carried-forward
losses” means group relief for carried-forward losses that relates to
losses or other amounts that the surrendering company has for a
surrender period in relation to which it is not a banking company.

(2) In this section “surrendering company” and “surrender period” have
40the same meaning as in Part 5A (see section 188FD).”

146 (1) Section 269DC (surcharge on banking companies: meaning of “non-banking
or pre-2016 loss relief) is amended as follows.

(2) In subsection (3)(b)—

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

Finance (No. 2) BillPage 375

(b) omit “trade” in the second place that word occurs.

(3) In subsection (4)(b)—

(a) after “457” insert “, 463G or 463H”, and

(b) omit “non-trading”.

(4) 5Omit subsection (5).

147 In section 385 (sales of lessors: no carry back of loss against the income) in
subsection (2) after “periods)” insert “or section 45F (relief for terminal trade
losses)”.

148 In section 398D (sales of lessors: restrictions on use of losses etc) after
10subsection (2) insert—

(2A) Group relief for carried-forward losses is not to be given under Part
5A against so much of the total profits of A as are attributable to the
carrying on of the relevant activity.”

149 In section 427 (sales of lessors: no carry back of loss against the income) in
15subsection (2) after “periods)” insert “or section 45F (relief for terminal trade
losses)”.

150 (1) Chapter 5 of Part 9 (sales of lessors: anti-avoidance provisions) is amended
as follows.

(2) In section 432 (introduction to section 433)—

(a) 20in subsection (1), in the words before paragraph (a), for “Section 433
applies” substitute “Sections 433 and 433A apply”, and

(b) in subsection (2) after “that section” insert “and section 433A”.

(3) In section 433 (restrictions on relief for expenses treated as incurred under
Chapter 3 or 4)—

(a) 25in subsection (3)—

(i) in paragraph (a) after “of” insert “pre-1 April 2017”,

(ii) after that paragraph insert—

(ab) section 45B (carry forward of post-1 April
2017 trade loss against subsequent trade
30profits),

(b) in subsection (5) after “profits)” insert “or section 45A (carry forward
of trade loss against total profits)”, and

(c) in subsection (6)—

(i) after “set off” insert

(a) 35”, and

(ii) at the end insert , or

(b) by way of group relief for carried-forward
losses in accordance with Chapter 2 of Part 5A
(surrender of company’s carried forward
40losses)”.

(4) After section 433 insert—

433A Restrictions not applying to the restricted loss amount

(1) Any deduction made under section 45 or 45B in respect of the
restricted loss amount is to be ignored for the purposes of the

Finance (No. 2) BillPage 376

restriction in section 269ZB (restriction on sum of deductions from
trading profits).

(2) Any deduction made under section 62 or 63 in respect of the
restricted loss amount is to be ignored for the purposes of the
5restriction in section 269ZD (restriction on sum of deductions from
total profits).”

151 In section 599 (real estate investment trusts: calculation of profits) after
subsection (8) insert—

(9) No account is to be taken of Part 7ZA of this Act (restrictions on
10obtaining certain deductions in respect of carried-forward losses).”

152 In section 601 (availability of group reliefs to a group UK REIT) in subsection
(2)—

(a) omit “and” at the end of paragraph (f), and

(b) after paragraph (g) insert , and

(h) 15Part 5A of this Act (group relief for carried-forward
losses)”.

153 In section 705E (shell companies: restriction on relief for non-trading loss on
intangible fixed assets), in subsection (3)(b), for “debit of” substitute “loss on
intangible fixed assets for”.

154 20In section 705F(2) (shell companies: apportionment of amounts), in column
1 of the table—

(a) in row 4, after “457(1)” insert “, 463G or 463H”,

(b) in row 4, omit “basic rule for deficits:”,

(c) in row 5, omit from “, but excluding” to the end, and

(d) 25in row 6, omit from “and treated” to the end.

155 In section 730C (disallowance of deductible amounts: relevant claims) in
subsection (2) (meaning of “relevant claim”)—

(a) omit “or” at the end of paragraph (a),

(b) after paragraph (a) insert—

(aa) 30section 45A (carry forward of post-1 April 2017 trade
loss against total profits),” and

(c) after paragraph (b) insert , or

(c) Chapter 3 of Part 5A (group relief for carried-forward
losses)”.

156 (1) 35Section 888 (restrictions on leasing partnership losses) is amended as
follows.

(2) In subsection (3) after “37” insert “or 45A”.

(3) In subsection (4)—

(a) after “set off” insert

(a) 40”, and

(b) at the end insert , or

(b) by way of group relief for carried-forward losses in
accordance with Chapter 2 of Part 5A (surrender of
company’s carried-forward losses etc)”.

(4) 45In subsection (6) in the definition of “relevant loss relief provision”—

Finance (No. 2) BillPage 377

(a) in paragraph (a) after “of” insert “pre-1 April 2017”, and

(b) after that paragraph insert—

(ab) section 45B (carry forward of post-1 April 2017 trade
loss against subsequent trade profits),”.

157 (1) 5Schedule 4 (index of defined expressions) is amended as follows.

(2) At the appropriate places insert—

“the claimant company (in
Part 5A)
section 188FD”
“the claim period (in Part 5A) section 188FD”
“Company (in Part 5A) 10section 188FD”
“group relief for carried-
forward losses”
section 188AA(4)”
“holding company (in Part
5A)
section 188FC(2)”
“member of a consortium (in
Part 5A)
15section 153(2) (applied by
section 188FB)”
“member of the same group
of companies (in Part 5A)
section 152 (applied by
section 188FB)”
“owned by a consortium (in
Part 5A)
section 153(1) and (3) (applied
20by section 188FB)”
“profits (in Part 5A) section 188FD”
“the specified loss-making
period” (in Part 5A)
section 188FD”
“75% subsidiary (in Part 5A) section 151 (applied by
25section 188FB)”
“the surrenderable amounts
(in Part 5A)
section 188FD”
“the surrendering company
(in Part 5A)
section 188FD
“the surrender period (in Part
5A)
30section 188FD”
“trade (in Part 5A) section 188FD”
“trading company (in Part
5A)
section 188FC(1)”

(3) 35In the entry for “75% subsidiary (except in Part 5)” after “Part 5” insert “and
Part 5A”.

Finance (No. 2) BillPage 378

TIOPA 2010

158 TIOPA 2010 is amended as follows.

159 In section 54 (double taxation relief by way of credit: non-trading debits on
loan relationships) in subsection (7)—

(a) 5in paragraph (b) of the definition of “carry-back claim”, after
“459(1)(b)” insert “or 463B(1)(b)”,

(b) in paragraph (b) of the definition of “carry-forward provision”, after
“457(1)” insert “, 463G(4) or 463H(3)”, and

(c) in paragraph (b) of the definition of “current-year provision or
10claim”, after “459(1)(a)” insert “or 463B(1)(a)”.

160 In section 55 (double taxation relief by way of credit: current year’s non-
trading deficits on loan relationships)—

(a) in subsection (4)(b), after “459(1)(a)” insert “or 463B(1)(a)”, and

(b) in subsection (5), for “or 459(1)(a)” substitute “, 459(1)(a) or
15463B(1)(a)”.

161 In section 156(1) (meaning of “losses” in Part 4)—

(a) in paragraph (e) after “Chapter 16” insert “or Chapter 16A”,

(b) omit “or” at the end of paragraph (f), and

(c) after paragraph (g) insert , or

(h) 20Part 5A of CTA 2010 (group relief for carried-forward
losses).”

162 In section 371IF (determining the profits of a CFC’s qualifying loan
relationship), in paragraph (b) of step 5, after “16” insert “or Chapter 16A”.

163 After section 371SK insert—

371SKA 25 Restrictions on certain deductions: deductions allowances

(1) This section applies for the purposes of—

(a) applying Part 7ZA of CTA 2010 (restrictions on obtaining
certain deductions), and

(b) applying any provision of Part 7ZA of CTA 2010 for the
30purposes of Part 7A of that Act (restrictions on obtaining
certain deductions: banking companies).

(2)
Assume that each of the following is nil—

(a) the CFC’s deductions allowance for the relevant accounting
period,

(b) 35the CFC’s trading profits deductions allowance for the
relevant accounting period, and

(c) the CFC’s non-trading profits deductions allowance for the
relevant accounting period.”

164 In subsection (2)(a) of section 371SL (group relief etc)—

(a) 40after “(group relief)” insert “or Part 5A of that Act (group relief for
carried-forward losses)”, and

(b) after “by way of group relief” insert “or group relief for carried-
forward losses”.

Finance (No. 2) BillPage 379

F (No. 3) A 2010

165 (1) In paragraph 10 of Schedule 9 to F(No.3)A 2010 (interest), the new Part A1
to be inserted into Schedule 54 to FA 2009 is amended as follows.

(2) In paragraph A1 (interest on tax repaid as a result of carrying back a non-
5trading deficit on company’s loan relationships)—

(a) in sub-paragraph (1)(c) for “or 459(1)(b)” substitute “, 459(1)(b) or
463B(1)(b)”, and

(b) in sub-paragraph (2) for “or 459(1)(b)” substitute “, 459(1)(b) or
463B(1)(b)”.

(3) 10After paragraph A2 insert—

A2A (1) This paragraph applies where—

(a) a company has profits arising in an accounting period
(“the earlier period”),

(b) the company ceases to carry on a trade in a later accounting
15period (“the later period”),

(c) on a claim under section 45F of CTA 2010 (terminal losses),
the whole or any part of a loss incurred in the trade has
been set off for the purposes of corporation tax against the
profits of the earlier period,

(d) 20the earlier period does not fall wholly within the period of
12 months immediately preceding the later period, and

(e) a repayment falls to be made of corporation tax paid for the
earlier period or of income tax in respect of a payment
received by the company in that period.

(2) 25So much of the repayment mentioned in sub-paragraph (1)(e) as
falls to be made as a result of the claim under section 45F does not
carry repayment interest.

(3) But sub-paragraph (2) does not apply (and, accordingly, the
amount mentioned in that sub-paragraph carries repayment
30interest) after the expiry of 9 months from the end of the later
period.”

(4) In paragraph A3 (interest on tax repaid as a result of a claim under section
77 of TIOPA 2010) in sub-paragraph (4) after “A4” insert “or A5”.

(5) After paragraph A4 insert—

A5 (1) 35This paragraph applies where—

(a) a company has profits arising in an accounting period
(“the middle period”),

(b) the company ceases to carry on a trade in a later accounting
period (“the later period”),

(c) 40on a claim under section 45F of CTA 2010 (terminal losses),
the whole or any part of a loss incurred in the trade has
been set off for the purposes of corporation tax against the
profits of the middle period,

(d) the middle period does not fall wholly within the period of
4512 months immediately preceding the later period,

(e) as a result of the claim under section 45F, an excess or
increased excess arises in the middle period as described in