Finance Bill (HC Bill 102)

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(c) the 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) 5the company’s BLAGAB trade profits deductions allowance
for 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
10amount of relief has been given as a consequence of the amount
specified 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
15alteration being made to the amount of group deductions
allowance 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),

20an assessment under subsection (3) is not out of time if it is made
within 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.

269ZZB 25 Meaning of “group”

(1) In 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) 30is 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) 35A 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
40of 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) 45Chapter 3 of Part 24 (subsidiaries).

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

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(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) a company (“the shareholder”) that directly owns shares in
5another 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
Chapter 3 of Part 24 for the purposes of subsection (4), they are to be
10read 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
to companies with ordinary share capital and holders of
15ordinary 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) they apply in relation to ownership through an entity (other
20than 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
assets are attributed to holders of corresponding ordinary
25holdings 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) In this section “corresponding ordinary holding” in an
30unincorporated 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
35company 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
Part 7ZA (which contains provision restricting the amount of certain
deductions which any kind of company may make in calculating its
40taxable 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)
is amended as follows.

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

(a) 45for “269CD” substitute “269ZF”, and

(b) omit “step 5 in”.

(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

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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) 5In 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
10determining 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
15“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) 20section 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
252017 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)
30is 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
follows.

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

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Part 3 Group relief for carried-forward losses

23 After section 188 of CTA 2010 insert—

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

CHAPTER 1 Introduction
188AA Introduction to Part

(1) This Part—

(a) 10allows 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
15for 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
20and 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 25Overview of Chapter

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

(2) Section 188BB sets out the basic provisions about the surrendering of
30losses and other amounts.

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

188BB Surrender of carried-forward losses and other amounts

(1) Subsection (2) applies if—

(a) 35a loss or other amount is carried forward to an accounting
period of a company under any of the following provisions—

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(i) section 463G(6) of CTA 2009 (carry forward of post-1
April 2017 non-trading deficit from loan
relationships);

(ii) section 753(3) of that Act (carry forward of non-
5trading loss on intangible fixed assets);

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

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

(v) 10sections 62(5)(a) and 63(3)(a) of this Act (carry
forward of loss made in UK property business); or

(b) section 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) 15The company may surrender the loss or other amount under this
Chapter so far as the loss or other amount is eligible for corporation
tax 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
20accounting period of the company (“the later period”) under section
124A(2) or 124C(3) of FA 2012.

(4) The 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) 25In subsection (4) “the remaining carried forward amount” means so
much of the amount carried forward (as mentioned in subsection (3))
as 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
30surrenders 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) 35In this Part, in relation to losses or other amounts within subsection
(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,

  • 40“surrendering company” means the company that has the
    losses 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 188BJ for provisions restricting what the
45surrendering company may surrender under this section.

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

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

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(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
an accounting period beginning before 1 April 2017,

(b) 5expenses 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) a loss carried forward to the surrender period under section
1062(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
period under section 1223 of CTA 2009.

188BD 15 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
753(3) of CTA 2009 if an investment business carried on by
20the 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
investment business became small or negligible before the
25beginning 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
that period.

(2) 30In this section—

(a) “company with investment business” has the same meaning
as in Part 16 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 35 Restriction where surrendering company could use losses etc itself

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

(a) section 269ZD(2) applies in determining the taxable total
profits of the surrendering company for the surrender
40period, and

(b) the sum of the relevant deductions (within the meaning of
section 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
45assets

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

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188BG Restrictions for certain insurance companies

(1) If the surrendering company is a general insurance company and the
surrender period is an excluded accounting period, the company
may not surrender under this Chapter—

(a) 5a loss carried forward to the surrender period under section
753(3) of CTA 2009;

(b) expenses carried forward to the surrender period under
section 1223 of CTA 2009;

(c) a loss carried forward to the surrender period under section
1062(5)(a) or 63(3)(a).

(2) In subsection (1) “excluded accounting period” and “general
insurance company” are to be interpreted in accordance with section
269ZG.

(3) If the surrendering company is a Solvency 2 insurance company it
15may not surrender under this Chapter—

(a) a loss carried forward to the surrender period under section
753(3) of CTA 2009,

(b) expenses carried forward to the surrender period under
section 1223 of CTA 2009, or

(c) 20a loss carried forward to the surrender period under section
62(5)(a) or 63(3)(a),

so far as the loss is, or (as the case may be) the expenses are, a shock
loss.

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

(1) 25This section applies in relation to a loss or other amount carried
forward to the surrender period if the surrendering company was
UK 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) 30is attributable to a permanent establishment through which
the company carried on a trade outside the United Kingdom
during the loss-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
35of the surrendering company if (ignoring this section) the amount
could be included in the company’s surrenderable amounts for the
surrender period if those amounts were determined—

(a) by reference to that establishment alone, and

(b) by applying, in relation to that establishment, principles
40corresponding in all material respects to those mentioned in
subsection (4).

(4) The 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
45company carried on a trade in the United Kingdom.

(5) An amount is within this subsection if, for the purposes of non-UK
tax chargeable under the law of the territory in which the permanent

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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
5to 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
the amount (or a corresponding amount) is or has been deductible or
otherwise allowable for tax purposes in the United Kingdom.

(7) 10The amount is to be treated as deductible or otherwise allowable for
the purposes of the non-UK tax chargeable under the law of the
territory concerned if (and only if) the surrendering company is
treated as resident in that territory for the purposes of the non-UK
tax.

(8) 15In this section and section 188BI

  • “the loss-making period”, in relation to a loss or other amount,
    means the accounting period in which the loss was made or
    the amount arose,

  • “non-UK tax” has the meaning it has in Part 5 (see section 187),
    20and

  • “non-UK profits” has the meaning given by section 108.

188BI Restriction on surrender of losses made when non-UK resident

(1) This section applies in relation to a loss or other amount carried
forward to the surrender period if during the loss-making period the
25surrendering company was a non-UK resident company—

(a) carrying on a trade of dealing in or developing UK land, or

(b) carrying on a trade in the United Kingdom through a
permanent establishment.

(2) If the surrendering company was established in the EEA during the
30loss-making period, it may surrender the loss or other amount under
this Chapter only so far as conditions A and B are met.

Subsection (8) imposes restrictions on a surrender under this
subsection.

(3) In any other case, the surrendering company may surrender the loss
35or other amount under this Chapter only so far as conditions A, B
and C are met in relation to the loss or amount.

(4) Condition A is that the loss or other amount is attributable to
activities of the surrendering company in respect of which it is
within the charge to corporation tax for the loss-making period.

(5) 40Condition B is that the loss or other amount is not attributable to
activities of the surrendering company that are double taxation
exempt for the loss-making period (within the meaning given by
section 186).

(6) Condition C is that—

(a) 45the loss or other amount does not correspond to, and is not
represented in, an amount with subsection (7), and

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(b) no amount brought into account in calculating the loss or
other amount corresponds to, or is represented in, an amount
within subsection (7).

(7) An amount is within this subsection if, for the purposes of non-UK
5tax chargeable under the law of a territory, the amount is or at any
time has been (in any period) deductible from or otherwise allowable
against non-UK profits of any person.

(8) A loss or other amount may not be surrendered by virtue of
subsection (2) if and to the extent that it, or any amount brought into
10account in calculating it, corresponds to, or is represented in,
amounts within subsection (9).

(9) An amount is within this subsection if, for the purposes of non-UK
tax chargeable under the law of a territory, the amount has (in any
period) been deducted from or otherwise allowed against non-UK
15profits of any person.

(10) But an amount is not to be taken to be within subsection (7) or (9) by
reason only that it is—

(a) an amount of profits brought into account for the purpose of
being excluded from non-UK profits of the person, or

(b) 20an amount brought into account in calculating an amount of
profits brought into account as mentioned in paragraph (a).

(11) Subsection (12) applies for the purposes of subsection (7) if, in order
to determine if an amount is or at any time has been deductible or
otherwise allowable for the purposes of non-UK tax chargeable
25under the law of a territory, it is necessary under that law to know if
the amount (or a corresponding amount) is or at any time has been
deductible or otherwise allowable for tax purposes in the United
Kingdom.

(12) The amount is to be treated as deductible or otherwise allowable for
30the purposes of the non-UK tax chargeable under the law of the
territory concerned.

(13) For the purposes of this section a company is established in the EEA
if—

(a) it is constituted under the law of the United Kingdom or an
35EEA territory, and

(b) it has its registered office, central administration or principal
place of business within the European Economic Area.

(14) In subsection (13) “EEA territory”, in relation to any time, means a
territory outside the United Kingdom that is within the European
40Economic Area at that time.

188BJ Restriction on surrender losses etc made when dual resident

The surrendering company may not surrender a loss or other
amount under this Chapter if the company was not eligible to
surrender the loss or other amount under Chapter 2 of Part 5 by
45reason of section 109 (restriction on losses etc surrenderable by dual
resident).

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CHAPTER 3 Claims for group relief for carried-forward losses
Introduction
188CA Overview of Chapter

This Chapter sets out how a company may claim group relief for
5carried-forward losses and how the relief is given.

Claiming group relief for carried-forward losses
188CB Claims in relation to all the surrenderable amounts

(1) This section applies in relation to the surrendering company’s
surrenderable amounts for the surrender period under Chapter 2.

(2) 10If the requirements in subsection (3) are met, a company (“the
claimant company”) may make a claim for group relief for carried-
forward losses for an accounting period (“the claim period”) in
relation to the surrenderable amounts.

(3) The requirements are as follows—

15Requirement 1

The surrendering company consents to the claim.

Requirement 2

There is a period (“the overlapping period”) that is common to the
claim period and the surrender period.

20Requirement 3

At a time during the overlapping period—

  • the group condition is met (see section 188CE)

  • consortium condition 1 is met (see section 188CF), or

  • consortium condition 2 is met (see section 188CG).

(4) 25A claim under this section may relate to the whole of the
surrenderable amounts or to part of them only.

(5) This section is subject to section 188CD (claim not allowed by
company with unused carried-forward losses of its own).

188CC Claims in relation to the surrenderable amounts that are attributable
30to a specified accounting period

(1) This section applies in relation to the surrendering company’s
surrenderable amounts for the surrender period under Chapter 2.

(2) If the requirements in subsection (3) are met, a company (“the
claimant company”) may make a claim for group relief for carried-
35forward losses for an accounting period (“the claim period”) in
relation to the surrenderable amounts that are attributable to an
accounting period of the surrendering company specified in the
claim (“the specified loss-making period”).

(3) The requirements are as follows—

40Requirement 1