Finance Bill (HC Bill 102)

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

(4) In this section “excluded accounting period” and “general insurance
company” have the same meaning as in section 45A.

45D Application of section 45B if loss remains after application of section
545A

(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 45A(4),

(b) 10any 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) the company continues to carry on the trade in the
15accounting period (“the further period”) after the later
period, and

(d) any of the conditions in section 45C(2) is not met.

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

(a) references to the unrelieved amount were to so much of the
20amount 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
application

(1) 25This 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) any of that amount is not used under section 45B(4) to reduce
30profits 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) Subsections (2) to (8) of section 45B apply as if—

(a) 35references 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 Terminal losses: relief unrestricted by Part 7ZA and 7A

(1) 40This 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
period of the company (“the terminal period”) under section
4545, 45A or 45B,

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(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) the company ceases to carry on the trade in the terminal
5period.

(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
unrelieved amount from the relevant profits of the company of—

(a) 10the 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
15accounting 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
20accounting 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
25period, 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
    30mentioned 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)

    35the 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
    40terminal 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
45period of 3 years mentioned in section 45F(3)(b).

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(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) 5The 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 10Section 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
activities of the trade begin to be carried on by a person who
15is 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
purposes, of which is to secure that that section applies by
20reason 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
follows.

(2) 25In 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) an amount of the loss is not deducted as mentioned in
30subsection (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) After subsection (5) insert—

(5A) 35But 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) A claim must be made—

(a) 40within 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.

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(5D) In 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) 5Section 63 (company with investment business ceasing to carry on UK
property 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
10accounting 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) 15But 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) 20A 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) 25Subsection (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 30CTA 2010 is amended as follows.

16 After section 269 insert—

“Part 7ZA Restrictions on obtaining certain deductions

Introduction
269ZA 35 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.

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Restrictions on obtaining certain deductions
269ZB 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) 5The sum of any deductions made by the company for the accounting
period which fall within subsection (3) may not exceed the relevant
maximum.

But this is subject to subsection (10).

(3) The following deductions fall within this subsection—

(a) 10any deductions under section 45(4)(b) or 45B;

(b) any deduction under section 303B(4) or 303D(5), so far as it is
a restricted deduction.

(4) For the purposes of this section a deduction under section 303B(4) or
303D(5) is a “restricted deduction” so far as it would not be available
15but for section 304(5) (reduction of income derived from related
activities).

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

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

(b) 20the company’s trading profits deductions allowance for the
accounting period.

(6) Section 269ZF contains provision for determining a company’s
relevant trading profits for an accounting period.

(7) A company’s “trading profits deductions allowance” for an
25accounting 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
trading profits deductions allowance for the period, and

(b) accordingly, is nil if no amount of the company’s deductions
30allowance for the period is so specified.

(8) An amount specified under subsection (7)(a) as a company’s trading
profits deductions allowance for an accounting period may not
exceed the difference between—

(a) the amount of the company’s deductions allowance for the
35period, and

(b) the total of any amounts specified for the period under
section 269ZC(5)(a) (non-trading profits deductions
allowance) and section 124D(4) of FA 2012 (BLAGAB trade
profits deductions allowance).

(9) 40A company’s “deductions allowance” for an accounting period is to
be determined in accordance with section 269ZR where, at any time
in that period—

(a) the company is a member of a group (see section 269ZZB),
and

(b) 45one or more other companies within the charge to
corporation tax are members of that group.

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Otherwise, a company’s “deductions allowance” for an accounting
period is to be determined in accordance with section 269ZW.

(10) Subsection (2) does not apply in relation to a company for an
accounting period where, in determining the company’s relevant
5trading profits, the amount given by step 1 in section 269ZF(3) is not
greater than nil.

269ZC Restriction on deductions from non-trading profits

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

(2) 10The sum of any deductions made by the company for the accounting
period under section 457(3) and 463H(5) of CTA 2009 (carry forward
of non-trading deficits from loan relationships against subsequent
non-trading profits) may not exceed the relevant maximum.

But this is subject to subsection (8).

(3) 15In this section the “relevant maximum” means the sum of—

(a) 50% of the company’s relevant non-trading profits for the
accounting period, and

(b) the amount of the company’s non-trading profits deductions
allowance for the accounting period.

(4) 20Section 269ZF contains provisions for determining a company’s
relevant non-trading profits for an accounting period.

(5) A company’s “non-trading profits deductions allowance” for an
accounting period—

(a) is so much of the company’s deductions allowance for the
25period as is specified in the company’s tax return as its non-
trading profits deductions allowance for the period, and

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

(6) An amount specified under subsection (5)(a) as a company’s non-
30trading profits deductions allowance for an accounting period 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
35section 269ZB(7)(a) (trading profits deductions allowance)
and section 124D(4) of FA 2012 (BLAGAB trade profits
deductions allowance).

(7) A company’s “deductions allowance” for an accounting period is to
be determined in accordance with section 269ZR where, at any time
40in that period—

(a) the company is a member of a group (see section 269ZZB),
and

(b) one or more other companies within the charge to
corporation tax are members of that group.

45Otherwise, a company’s “deductions allowance” for an accounting
period is to be determined in accordance with section 269ZW.

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(8) Subsection (2) does not apply in relation to a company for an
accounting period where, in determining 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.

269ZD 5 Restriction on deductions from total profits

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

(2) The sum of any relevant deductions made by the company for the
accounting period may not exceed the difference between—

(a) 10the relevant maximum, and

(b) the sum of—

(i) any deductions falling within section 269ZB(3) (carry
forward of trade loss against subsequent trade
profits) made by the company for the accounting
15period,

(ii) any deductions made by the company for the
accounting period under sections 457(3) and 463H(5)
of CTA 2009 (carry forward of non-trading deficits
from loan relationships against subsequent non-
20trading profits), and

(iii) any deductions made by the company for the
accounting period under sections 124(5), 124A(5) and
124C(6) of FA 2012 (carry forward of BLAGAB trade
losses against BLAGAB trade profits).

25But this is subject to subsection (7) and section 269ZE.

(3) The following deductions made for an accounting period are
“relevant deductions” for the purposes of this section—

(a) a deduction under section 463G of CTA 2009 (carry forward
of non-trading deficit against total profits);

(b) 30a deduction under section 753 of CTA 2009 (non-trading
losses on intangible fixed assets) in respect of a loss treated by
subsection (3) of that section (carry forward of losses) as if it
were a loss of the accounting period;

(c) a deduction under section 1219 of CTA 2009 (expenses of
35management of a company’s investment business) in respect
of an amount treated by section 1223(3) of that Act (carrying
forward of expenses of management and other amounts) as
expenses of management deductible for the accounting
period;

(d) 40a deduction under section 1219 of CTA 2009 (expenses of
management of a company’s investment business) in respect
of a loss treated by section 63(3) (carrying forward of certain
losses made by company with investment business which
ceases to carry on UK property business) as an expense of
45management deductible for the accounting period;

(e) a deduction under section 37 (relief for trade losses against
total profits) made in reliance on section 1210(3), 1216DB(3),
1217DB(3), 1217MB(2), 1217SB(2) or 1218ZDB(2) of CTA
2009;

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(f) a deduction under section 45A (carry forward of trade loss
against total profits);

(g) a deduction under section 62(3) (relief for losses made in UK
property business) in respect of a loss treated by subsection
5(5)(b) of that section (carry forward of losses) as a loss made
by the company in the accounting period;

(h) a deduction under section 303C (excess carried forward non-
decommissioning losses of ring fence trade: relief against
total profits);

(i) 10a deduction under Part 5 (group relief) made in respect of a
loss surrendered under that Part in reliance on section
1210(3), 1216DB(3), 1217DB(3), 1217MB(2), 1217SB(2) or
1218ZDB(2) of CTA 2009;

(j) a deduction under Part 5A (group relief for carried-forward
15losses);

(k) a deduction under section 124B of FA 2012 (deduction from
total profits of excess carried-forward BLAGAB trade losses),

(but see section 269ZJ (insurance companies: shock losses).

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

(a) 2050% of the company’s relevant profits for the accounting
period, and

(b) the amount of the company’s deductions allowance for the
accounting period.

(5) A company’s “relevant profits” for an accounting period are the sum
25of—

(a) the company’s relevant trading profits for the accounting
period (see section 269ZF(1)),

(b) the company’s relevant non-trading profits for the
accounting period (see section 269ZF(2), and

(c) 30the company’s relevant BLAGAB trade profits for the
accounting period.

In this subsection “relevant BLAGAB trade profits” has the same
meaning as in section 124D of FA 2012.

(6) A company’s “deductions allowance” for an accounting period is to
35be determined in accordance with section 269ZR where, at any time
in that period—

(a) the company is a member of a group (see section 269ZZB),
and

(b) one or more other companies within the charge to
40corporation tax are members of that group.

Otherwise, the company’s “deductions allowance” for the
accounting period is to be determined in accordance with section
269ZW.

(7) Subsection (2) does not apply in relation to a company for an
45accounting period where the sum of—

(a) the amount given by paragraph (1) of step 1 in section
269ZF(3), and

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

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is not greater than nil.

269ZE Restriction on deductions from total profits: insurance companies

(1) Where the conditions in subsection (2) are met, section 269ZD has
effect as if, for subsection (2) of that section there were substituted—

(2) 5The sum of any relevant deductions made by the company
for the accounting period may not exceed the modified loss
cap (as defined in section 269ZE).

But this is subject to subsection (7).”

(2) The conditions are that—

(a) 10the company referred to in section 269ZD(1) carries on
business to which the charge to corporation tax under section
68 of FA 2012 (charge to tax on I-E profit) applies and has an
I-E profit for the accounting period,

(b) the policyholders’ share (if any) of the I-E profit is not the
15whole of that profit, and

(c) the adjusted shareholders’ I-E profit for the accounting
period is less than the BLAGAB-related loss capacity.

(3) The “adjusted shareholders’ I-E profit” is equal to—

(a) the shareholders’ share of the I-E profit, less

(b) 20any excess capacity.

(4) The “BLAGAB-related loss capacity” is equal to A + B - C where—

  • A is 50% of the company’s relevant BLAGAB trade profits for
    the accounting period (as defined in section 124D of FA 2012);

  • B is the company’s BLAGAB trade profits deductions
    25allowance for the period (if any) (as defined in section 124D
    of FA 2012);

  • C is the total of any deductions made by the company for the
    accounting period under sections 124(5), 124A(5) and 124C(6)
    of FA 2012.

(5) 30To determine the modified loss cap, take the following steps—

Step 1: find the basic loss cap.

Step 2: reduce that amount by the BLAGAB-related loss capacity.

Step 3: add to the result of step 2 the adjusted shareholders’ I-E
profit.

35The result is the modified loss cap.

(6) In this section “the basic loss cap” means the difference referred to in
the opening words of section 269ZD(2) (assuming that that section
has effect without the modification set out in subsection (1) of this
section) (but, if applicable, taking account of section 269ZJ).

(7) 40In this section “excess capacity” means the amount (if any) by
which—

(a) the section 269ZF step 2 amount, is less than

(b) what the section 269ZF step 2 amount would be if in
paragraph (d) of section 269ZF(4) the reference to any I-E
45profit were to the policyholders’ share of any I-E profit.

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(8) In subsection (7) the reference to the “section 269ZF step 2 amount”
is to the sum given by paragraph (1) of step 2 of section 269ZF(3) in
calculating the company’s relevant trading profits and relevant non-
trading profits for the accounting period: but for this purpose
5disregard paragraph (4) of step 1 of section 269ZF(3).

(9) For the purposes of this section the “shareholders’ share” of an
insurance company’s I-E profit for an accounting period is equal to—

(a) the amount of the I-E profit, less

(b) the policyholders’ share (if any) of that profit.

(10) 10In this section references to the policyholders’ share of I-E profit are
to that share as determined in accordance with section 103 of FA
2012.

Relevant profits
269ZF “Relevant trading profits” and “relevant non-trading profits”

(1) 15A company’s “relevant trading profits” for an accounting period
are—

(a) the company’s qualifying trading profits for the accounting
period (see subsection (3)), less

(b) the company’s trading profits deductions allowance for the
20accounting period (see section 269ZB(7)).

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

(2) A company’s “relevant non-trading profits” for an accounting period
25are—

(a) the company’s qualifying non-trading profits for the
accounting period (see subsection (3)), less

(b) the company’s non-trading profits deductions allowance for
the accounting period (see section 269ZC(5)).

30But if the allowance mentioned in paragraph (b) exceeds the profits
mentioned in paragraph (a), the company’s “relevant non-trading
profits” for the accounting period are nil.

(3) To determine a company’s qualifying trading profits and qualifying
non-trading profits for an accounting period—

35Step 1 - modified total profits

(1)

Calculate the company’s total profits for the accounting
period.

(2)

For the purposes of this subsection assume that the
company’s total profits for the accounting period are to be
40calculated with the modifications set out in subsection (4).

(3)

If the company’s total profits for the accounting period (as
modified under paragraph (2)) are not greater than nil, the
company’s qualifying trading profits and relevant non-
trading profits for the accounting period are both nil.

(4)

45Otherwise, proceed with steps 2 to 5.

Step 2 - negative amount for apportioning under step 4