Finance Bill (HC Bill 116)

Finance BillPage 181

than deductions that would be ignored for the purposes of
section 269ZB by reason of—

(i) section 1209(3), 1210(5A) or 1211(7A) of CTA 2009
(losses of film trade),

(ii) 5section 1216DA(3), 1216DB(5A) or 1216DC(7A) of
that Act (losses of television programme trade),

(iii) section 1217DA(3), 1217DB(5A) or 1217DC(7A) of
that Act (losses of video game trade),

(iv) section 1217MA(3) or 1217MC(9) of that Act (losses of
10theatrical trade),

(v) section 1217SA(3) or 1217SC(9) of that Act (losses of
orchestral trade),

(vi) section 1218ZDA(3) or 1218ZDC(9) of that Act (losses
of museum or gallery exhibition trade),

(vii) 15section 65(4B) or 67A(5A) (losses of UK or EEA
furnished holiday lettings business),

(viii) section 269ZJ(1) (insurance companies: shock losses),

(ix)(ix) section 304(7) (certain losses of ring fence trades), or

(x) section 356NJ(2) (pre-1 April 2017 loss arising from oil
20contractor activities);

(f) make no restricted deductions (as defined in section
269ZB(4)) under section 303B(4) or 303D(5)); and

(g) make no deductions under section 457(3) or 463H(5) of CTA
2009 (carry forward of non-trading deficits from loan
25relationships against subsequent non-trading profits), other
than deductions that would be ignored for the purposes of
section 269ZC by reason of section 269ZJ(2) (insurance
companies: shock losses).

(5) The following are “excluded deductions” for an accounting period
30(“the current accounting period”)—

(a) a deduction for the current accounting period which is a
relevant deduction for the purposes of section 269ZD (see
subsection (3) of that section);

(b) a deduction under section 37 (relief for trade losses against
35total profits) in relation to a loss made in an accounting
period after the current accounting period;

(c) a deduction under section 45F (terminal losses);

(d) a deduction under section 260(3) of CAA 2001 (special leasing
of plant or machinery: carry back of excess allowances) in
40relation to capital allowances for an accounting period after
the current accounting period; and

(e) a deduction under section 463E of CTA 2009 (non-trading
deficit from loan relationships) in relation to a deficit for a
period after the current accounting period.

45Exclusion for certain general insurance companies
269ZG General insurance companies: excluded accounting periods

(1) Nothing in sections 269ZB to 269ZE has effect for determining the
taxable total profits of a general insurance company for an excluded
accounting period.

Finance BillPage 182

(2) An accounting period of a general insurance company is an
“excluded accounting period” if conditions A and B are met.

(3) Condition A is that—

(a) the company is subject to insolvency procedures (see section
5269ZH) at the end of the accounting period,

(b) immediately before it became subject to insolvency
procedures the company—

(i) was unable to pay its debts as they fell due, and

(ii) met the non-viability condition, and

(c) 10the company’s liabilities in respect of qualifying latent claims
(see section 269ZI) were the main factor contributing to the
company’s meeting the non-viability condition at that time.

(4) Condition B is that—

(a) at the end of the accounting period the company meets the
15non-viability condition, and

(b) the company’s liabilities in respect of qualifying latent claims
are the main factor contributing to the company’s meeting
that condition at that time.

(5) At any time, a general insurance company meets the non-viability
20condition if there is no realistic prospect that it will subsequently
write any new insurance business.

(6) For the purposes of this section a person who carries on the activity
of effecting or carrying out contracts of general insurance is a
“general insurance company” if—

(a) 25the person has permission under Part 4A of the Financial
Services and Markets Act 2000 to carry on that activity,

(b) the person is of the kind mentioned in paragraph 5(d) or (da)
of Schedule 3 to the Financial Services and Markets Act 2000
(EEA passport rights) and carries on that activity in the
30United Kingdom through a permanent establishment there,
or

(c) the person qualifies for authorisation under Schedule 4 to the
Financial Services and Markets Act 2000 (Treaty rights) and
carries on that activity in the United Kingdom through a
35permanent establishment there.

(7) The definition in subsection (6) is subject to the following
qualifications—

(a) a friendly society within the meaning of Part 3 of FA 2012 is
not a general insurance company, and

(b) 40an insurance special purpose vehicle (as defined in section
139 of FA 2012) is not a general insurance company.

(8) In this section—

  • “contract of general insurance” means a contract of a type
    described in Part 1 of Schedule 1 to the Financial Services and
    45Markets Act 2000 (Regulated Activities) Order 2001
    (S.I. 2001/544S.I. 2001/544);

  • “liability” includes a contingent or prospective liability.

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269ZH “Insolvency procedures”

(1) For the purposes of section 269ZG a company is subject to insolvency
procedures if—

(a) it is in liquidation,

(b) 5it is in administration,

(c) it is in receivership, or

(d) a relevant scheme has effect in relation to it.

(2) A company is “in liquidation” for the purposes of this section if—

(a) it is in liquidation within the meaning of section 247 of the
10Insolvency Act 1986 or Part 3 of the Insolvency (Northern
Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)S.I. 1989/2405 (N.I. 19), or

(b) a corresponding situation under the law of a country or
territory outside the United Kingdom exists in relation to the
company.

(3) 15A company is “in administration” for the purposes of this section if—

(a) it is in administration within the meaning of Schedule B1 to
the Insolvency Act 1986 or Schedule B1 to the Insolvency
(Northern Ireland) Order 1989, or

(b) there is in force in relation to it under the law of a country or
20territory outside the United Kingdom any appointment
corresponding to the appointment of an administrator under
either of those Schedules.

(4) A company is “in receivership” for the purposes of this section if
there is in force in relation to it—

(a) 25an order for the appointment of an administrative receiver, a
receiver and manager or a receiver under Chapter 1 or 2 of
Part 3 of the Insolvency Act 1986 or Part 4 of the Insolvency
(Northern Ireland Order) 1989, or

(b) any corresponding order under the law of a country or
30territory outside the United Kingdom.

(5) In this section “relevant scheme” means a compromise or
arrangement—

(a) under section 425 of the Companies Act 1985, Article 418 of
the Companies (Northern Ireland) Order 1986 (S.I. 1986/
351032 (N.I. 6)) or Part 26 of the Companies Act 2006, or

(b) under any corresponding provision of the law of a country or
territory outside the United Kingdom.

269ZI “Qualifying latent claims”

(1) This section applies for the purposes of section 269ZG.

(2) 40Where a general insurance company has a liability in respect of a
claim, the claim is a “qualifying latent claim” if conditions A to C are
met.

(3) In this section “claim” means a claim (whether actual or potential)
under an insurance policy.

(4) 45Condition A is that—

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(a) the claim is of a type that was not reasonably foreseeable at
the time when the insurance policy concerned was entered
into, and

(b) it is likely that, had the company foreseen that type of claim,
5the price or other terms of the policy would have been
significantly different.

(5) Condition B is that the latency period associated with that type of
claim (see subsection (7)) is more than 10 years.

(6) Condition C is that the insurance policy, or the part of the insurance
10policy under which the claim is or would be made, is—

(a) an employer’s liability policy, or

(b) a public or products liability policy.

(7) The “latency period” associated with a type of claim is the mean
period for claims of the type between—

(a) 15the insured event giving rise to the claim, and

(b) notification of the claim.

(8) The mean period mentioned in subsection (7) is to be determined as
at the end of the accounting period mentioned in section 269ZG(2).

(9) In this section—

  • 20“employer’s liability policy” means an insurance policy against
    the risks of the person insured incurring liabilities to the
    insured’s employees for injury, illness or death arising out of
    their employment during the course of business;

  • “general insurance company” is to be interpreted in accordance
    25with section 269ZG;

  • “insurance policy” includes any contract of insurance;

  • “liability” includes a contingent or prospective liability;

  • “public or products liability policy” means an insurance policy
    against the risks of the person insured incurring liabilities to
    30third parties for damage to property, injury, illness or death,
    arising in the course of the insured’s business.

269ZJ Exclusion of shock losses from restrictions

(1) If a shock loss is—

(a) carried forward to an accounting period of an insurance
35company (see section 269ZP(2)), and

(b) deducted under section 45B (post-1 April 2017 trade losses
carried forward against trade profits),

the deduction is to be treated as not falling within section 269ZB(3).

(2) If a shock loss is—

(a) 40carried forward to an accounting period of an insurance
company, and

(b) deducted under section 463H of CTA 2009 (carry forward of
unrelieved non-trading deficit from loan relationships
against non-trading profits),

45the company is to be treated for the purposes of sections 269ZC and
269ZD(2)(b)(ii) as not having made that deduction.

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(3) If an insurance company makes a deduction of (or in respect of) a
shock loss, that deduction is not a “relevant deduction” for the
purposes of section 269ZD (restriction on deductions from total
profits).

(4) 5See also section 124E of FA 2012 (exclusion from the restriction on
deductions from BLAGAB trade profits).

269ZK Meaning of “shock loss”: requirement to make a claim

(1) If the conditions in subsection (3) are met, an insurance company
may make a claim in respect of—

(a) 10a loss or other amount (the “specified loss”), and

(b) a period of 12 months (“the specified period”) which is a
solvency shock period (see section 269ZM).

(2) A claim may specify more than one 12 month period under
subsection (1)(b) (but periods specified by an insurance company
15under this section may not overlap with one another).

(3) The conditions are that—

(a) the accounting period (for corporation tax purposes) in
which the specified loss arises (“the loss-making period”)
begins on or after 1 April 2017,

(b) 20the specified loss is, or is capable of being, carried forward to
a subsequent accounting period, and

(c) the loss-making period and the specified period have one or
more days in common.

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

(a) 25the period of two years after the end of the loss-making
period, or

(b) such further period as an officer of Revenue and Customs
allows.

(5) If—

(a) 30a claim is made under this section, and

(b) the whole of the loss-making period is, or falls within, the
specified period,

the specified loss is a “shock loss”.

(6) If—

(a) 35a claim is made under this section, and

(b) the loss-making period falls partly, but not wholly, in the
specified period,

the specified loss is a “shock loss” so far as it is attributable to the
specified period.

(7) 40For the purposes of subsection (6) the specified loss is “attributable
to” the specified period in the proportion—


Where P is the number of days of the loss-making period that fall
within the specified period and N is the number of days in the loss-
45making period.

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(8)
If the method in subsection (7) would produce a result that is unjust
or unreasonable, the apportionment of the specified loss for the
purposes of subsection (6) is to be made on a just and reasonable
basis.

269ZL 5 Further provision about claims under section 269ZK

(1) A claim under section 269ZK is not effective unless—

(a) the claim—

(i) states the company’s solvency capital requirement at
the beginning of the specified period,

(ii) 10states the company’s shock loss threshold for that
period, and sets out the calculation of that amount (as
described in steps 2 to 5 of 269ZN(1)), and

(iii) states the amount of the company’s solvency loss for
that period (see section 269ZO), and

(b) 15the company submits with the claim—

(i) information (“the submitted information”)
corresponding to the information specified in the
template mentioned in point (i), (j) or (k) (as the case
requires) of Article 4 of the technical standards
20implementing Regulation, and

(ii) a report provided by the appropriate person which
meets the condition in subsection (2).

(2) The condition is that the report includes an opinion confirming
that—

(a) 25the submitted information is prepared in all material respects
in accordance with any relevant requirements which would
apply if the submitted information were disclosed as part of
the company’s report on solvency and financial condition,

(b) the calculation of the company’s shock loss threshold (not
30including step 1(a) of section 269ZN(1)) complies in all
material respects with section 269ZN, and

(c) the company’s solvency loss is calculated in all material
respects in accordance with section 269ZO.

(3) In this section “relevant requirements” means—

(a) 35requirements under rules made by the Prudential Regulation
Authority, and

(b) requirements under any directly applicable EU regulation
made under the Solvency 2 Directive.

(4) In this section “the appropriate person” means—

(a) 40the company’s chief actuary, or

(b) (if the company is not a PRA-authorised person) a person
with equivalent functions.

(5) Subsections (1)(b)(i), (2)(a) and (3) have effect in relation to a third-
country insurance undertaking as if it were an insurance
45undertaking.

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269ZM Meaning of “solvency shock period”

A period of 12 months is a “solvency shock period” in relation to an
insurance company if the company has a solvency loss for that
period (see section 269ZO) which exceeds the company’s shock loss
5threshold for that period (see section 269ZN).

269ZN Determination of shock loss threshold

(1) A company’s shock loss threshold for a 12 month period is
determined as follows.

Step 1

(a)

10Calculate the company’s solvency capital requirement at the
beginning of that period.

(b)

But any adjustment for the loss-absorbing capacity of
deferred taxes is to be calculated, and applied, on the
assumption that that period is a solvency shock period in
15relation to the company.

(c)

The resulting amount is the company’s “adjusted SCR”.

Step 2

Calculate the deductible amount (see subsection (2)) for each
relevant ring-fenced fund of the company.

20Step 3

Deduct the total of the amounts found under step 2 from the
company’s adjusted SCR.

Step 4

Multiply the amount found under step 3 by 90%.

25Step 5

The result is the company’s shock loss threshold for the period.

(2) The deductible amount for a relevant ring-fenced fund is the lesser
of A and B, where—

(a) A is the amount of basic own funds within that fund at the
30beginning of the period (or zero, if greater);

(b) B is the notional solvency capital requirement for that fund at
the beginning of that period.

(3) But in calculating amount A for the purposes of subsection (2)—

(a) no account is to be taken of the value of future transfers
35attributable to shareholders;

(b) a restricted own-fund item within the fund is to be
disregarded if the company’s with-profits actuary provides a
written opinion confirming that the condition in subsection
(4) is met.

(4) 40The condition is that—

(a) the item is available as a restricted own-fund item pursuant
to conditional support arrangements, and

(b) if at the time mentioned in subsection (2)(a) or any
subsequent time (when the conditional support
45arrangements are in place) the value of the company’s
interest in the item were to be (or is in fact) greater than zero,
that value would be recognised for the purposes of a balance

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sheet drawn up at the time in question by the company in
accordance with generally accepted accounting practice.

(5) In this section “conditional support arrangements” means
arrangements under which the relevant restrictions would cease to
5apply if specified conditions relating to the financial strength of the
fund were met.

(6) In subsection (5) “the relevant restrictions” means the restrictions on
transferability as a result of which the item is a restricted own-fund
item.

(7) 10In this section “adjustment for the loss-absorbing capacity of
deferred taxes” means—

(a) an adjustment pursuant to Article 103(c) of the Solvency 2
Directive, or

(b) any corresponding adjustment made pursuant to Subsection
153 of Section 4 of Chapter 6 of Title 1 of the Solvency 2
Directive (solvency capital requirement full and partial
internal models).

(8) Where the company is a third-country insurance undertaking—

(a) steps 1(b) and 2 to 5 of subsection (1), and

(b) 20subsections (2) to (7),

have effect with any modifications that are appropriate as a result of
the reference in step 1(a) of subsection (1) to the “solvency capital
requirement” having effect in accordance with section 269ZP(1)(b).

269ZO Calculation of solvency loss

(1) 25An insurance company’s solvency loss (if any) for a 12 month period
is determined as follows.

(2) Calculate, in the manner set out in subsections (5) to (11)

(a) whether the total amount of the company’s basic own funds
at the beginning of the period (“opening BOF”) exceeds the
30total amount of the company’s basic own funds at the end of
the period (“closing BOF”), and

(b) if so, the amount by which opening BOF exceeds closing BOF.

(3) The company has a solvency loss for the 12 month period only if an
excess of opening BOF over closing BOF is found under subsection
35(2)(a).

(4) The amount found under subsection (2)(b) is the amount of the
solvency loss.

(5) The method of calculation under subsection (2) must fairly represent
the method by which the company calculates its solvency capital
40requirement.

But this is subject to subsections (6) to (10).

(6) Closing BOF is to be calculated on the assumption that the 12 month
period mentioned in subsection (1) is a solvency shock period in
relation to the company.

(7) 45The following adjustments are to be made in calculating the
company’s basic own funds at the beginning and end of the period—

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  • 1. Find (with respect to each of those times) what that amount
    would be in the absence of this subsection.

  • 2. Find the surplus in respect of each relevant ring-fenced
    fund of the company (at the time in question).

  • 53. Deduct the total of the amounts found under paragraph 2
    from the amount found under paragraph 1.

The result is to be taken to be the amount of the company’s basic own
funds at the beginning, or (as the case may be) the end, of the period.

(8) The surplus in respect of a relevant ring-fenced fund (at any time) is
10equal to—

(a) the amount of basic own funds attributable to policyholders,
or

(b) zero, if greater.

(9) For any relevant ring-fenced fund, the amount of basic own funds
15attributable to policyholders (at any time) is equal to—


A − B

where—

A is the amount of basic own funds within the relevant ring-fenced
fund;

20B is the total of any items in the fund that fall within subsection (10).

(10) The items are—

(a) the value of future transfers attributable to shareholders;

(b) any restricted own-fund item in relation to which the
company’s with-profits actuary provides a written opinion
25confirming that the condition in subsection (4) of section
269ZN is met.

(11) In subsection (5) the reference to the “method” of a calculation is to
the—

(a) taking into account, and

(b) 30leaving out of account,

of variations in items of basic own funds for the purposes of the
calculation.

(12) If the company is a third-country insurance undertaking, subsections
(1) to (11) have effect in relation to it as if it were an insurance
35undertaking.

269ZP Interpretation of sections 269ZJ to 269ZO

(1) In sections 269ZJ to 269ZO “solvency capital requirement”—

(a) in relation to an insurance undertaking or a reinsurance
undertaking, means the solvency capital requirement
40pursuant to Section 4 of Chapter 6 of Title 1 of the Solvency 2
Directive;

(b) in relation to a third-country insurance undertaking, means
the amount that would be the undertaking’s solvency capital

Finance BillPage 190

requirement pursuant to Section 4 of Chapter 6 of Title 1 of
the Solvency 2 Directive if that undertaking were an
insurance undertaking.

(2) In sections 269ZJ to 269ZO and this section—

  • 5“actuarial function”, in relation to a PRA-authorised person, has
    the meaning given by the PRA Rulebook;

  • “basic own funds” is to be interpreted in accordance with
    Article 88 of the Solvency 2 Directive;

  • “chief actuary”, in relation to a PRA-authorised person, means
    10a person who has the function of having responsibility for the
    actuarial function;

  • “insurance company” means a company which is an insurance
    undertaking, a reinsurance undertaking or a third-country
    insurance undertaking;

  • 15“insurance undertaking” has the meaning given in Article 13(1)
    of the Solvency 2 Directive;

  • “notional solvency capital requirement”, in relation to a ring-
    fenced fund, has the same meaning as in Commission
    Delegated Regulation (EU) 2015/35 supplementing the
    20Solvency 2 Directive;

  • “PRA-authorised person” has the same meaning as in the
    Financial Services and Markets Act 2000 (see section 2B(5) of
    that Act);

  • “the PRA Rulebook” means the Rulebook made by the
    25Prudential Regulation Authority under the Financial Services
    and Markets Act 2000 (as that Rulebook has effect from time
    to time);

  • “reinsurance undertaking” has the meaning given in Article
    13(4) of the Solvency 2 Directive;

  • 30“relevant ring-fenced fund” means a ring-fenced fund that is a
    with-profits fund;

  • “report on solvency and financial condition” means a report on
    solvency and financial condition pursuant to Article 51 of the
    Solvency 2 Directive;

  • 35“restricted own-fund item” is to be interpreted in accordance
    with Article 80(2) of Commission Delegated Regulation (EU)
    2015/35 supplementing the Solvency 2 Directive;

  • “ring-fenced fund” has the same meaning as in Commission
    Delegated Regulation (EU) 2015/35 supplementing the
    40Solvency 2 Directive;

  • “Solvency 2 Directive” means Directive 2009/138/EC of the
    European Parliament and the Council of 25 November 2009
    on the taking-up and pursuit of the business of Insurance and
    Reinsurance (Solvency II);

  • 45“technical standards implementing Regulation” means
    Commission Implementing Regulation (EU) 2015/2452 of 2
    December 2015 laying down implementing technical
    standards with regard to the procedures, formats and
    templates of the solvency and financial condition report in
    50accordance with the Solvency 2 Directive;

  • “third-country insurance undertaking” means an undertaking
    that has received authorisation under Article 162 of the

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    Solvency 2 Directive from the Prudential Regulation
    Authority or the Financial Conduct Authority;

  • “value of future transfers attributable to shareholders” has the
    same meaning as in Article 80 of Commission Delegated
    5Regulation (EU) 2015/35 supplementing the Solvency 2
    Directive;

  • “with-profits fund” has the meaning given by the Glossary
    forming part of the PRA Rulebook;

  • “with-profits actuary” has the meaning given by the Glossary
    10forming part of the Handbook made by the Financial
    Conduct Authority under the Financial Services and Markets
    Act 2000 (as that Handbook has effect from time to time).

269ZQ Power to amend

(1) The Treasury may by regulations make such amendments of the
15provisions mentioned in subsection (2) as they consider appropriate
in consequence of—

(a) any change made to, or replacement of, the PRA Rulebook or
the FCA Handbook;

(b) any regulatory requirement, or change to a regulatory
20requirement, imposed by EU legislation, or by or under any
Act (whenever adopted, enacted or made).

(2) The provisions are—

(a) sections 269ZJ to 269ZP,

(b) sections 124A to 124E of FA 2012.

(3) 25Regulations under this section may include transitional provision.

(4) In this section—

  • “the PRA Rulebook” means the Rulebook made by the
    Prudential Regulation Authority under the Financial Services
    and Markets Act 2000 (as that Rulebook has effect from time
    30to time);

  • “the FCA Handbook means the Handbook made by the
    Financial Conduct Authority under the Financial Services
    and Markets Act 2000 (as that Handbook has effect from time
    to time).

35Deductions allowance
269ZR Deductions allowance for company in a group

(1) This section makes provision as to the deductions allowance of a
company for an accounting period where, at any time in the period—

(a) the company is a member of a group, and

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

(2) The company’s deductions allowance for the accounting period is
the sum of—

(a) any amounts of group deductions allowance allocated to the
45company for the period in accordance with sections 269ZS to
269ZV, and

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(b) the appropriate amount of non-group deductions allowance
of the company for the period,

up to a limit of £5,000,000.

(3) The “appropriate amount of non-group deductions allowance” of the
5company, for the accounting period, is—


where—

  • “DNG” is the number of days in the period on which the
    company is not a member of a group that has another
    10member that is a company within the charge to corporation
    tax, and

  • “DAC” is the total number of days in the period.

(4) If the accounting period is less than 12 months—

(a) the appropriate amount of non-group deductions allowance,
15and

(b) the limit in subsection (2),

are proportionally reduced.

269ZS Group deductions allowance and the nominated company

(1) This section applies where—

(a) 20two or more members of a group are companies within the
charge to corporation tax, and

(b) all the companies within the charge to corporation tax that
are members of the group together nominate (“the group
allowance nomination”) one of their number (“the nominated
25company”) for the purposes of this Part.

(2) The “group deductions allowance” for the group is £5,000,000 for
each accounting period of the nominated company throughout
which the group allowance nomination has effect.

(3) If the group allowance nomination takes effect, or ceases to have
30effect, part of the way through an accounting period of the
nominated company, the “group deductions allowance” for the
group for that period is—


where—

  • 35“DN” is the number of days in the accounting period on which
    a group allowance nomination that nominates the nominated
    company in relation to the group has effect, and

  • “DAC” is the total number of days in the accounting period.

(4) If an accounting period of the nominated company is less than 12
40months, the group deductions allowance for that period is
proportionally reduced.

(5) A group allowance nomination must state the date on which it is to
take effect (which may be earlier than the date the nomination is
made).

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(6) A group allowance nomination is of no effect unless it is signed by
the appropriate person on behalf of each company that is, when the
nomination is made, a member of the group and within the charge to
corporation tax.

(7) 5A group allowance nomination ceases to have effect—

(a) immediately before the date on which a new group
allowance nomination in respect of the group takes effect,

(b) upon the appropriate person in relation to a company within
the charge to corporation tax that is a member of the group
10notifying an officer of Revenue and Customs, in writing, that
the group allowance nomination is revoked, or

(c) upon the nominated company ceasing to be a company
within the charge to corporation tax or ceasing to be a
member of the group.

(8) 15The Commissioners for Her Majesty’s Revenue and Customs may by
regulations make further provision about a group allowance
nomination or any notification under this section including, in
particular, provision—

(a) about the form and manner in which a nomination or
20notification may be made,

(b) about how a nomination may be revoked and the form and
manner of such revocation,

(c) requiring a person to notify HMRC of the making or
revocation of a nomination,

(d) 25requiring a person to give information to HMRC in
connection with the making or revocation of a nomination or
the giving of a notification,

(e) imposing time limits in relation to making or revoking a
nomination or giving a notification, and

(f) 30providing that a nomination or its revocation, or a
notification, is of no effect, or ceases to have effect, if time
limits or other requirements under the regulations are not
met.

(9) In this Part “the appropriate person”, in relation to a company,
35means—

(a) the proper officer of the company, or

(b) such other person as may for the time being have the express,
implied or apparent authority of the company to act on its
behalf for the purposes of this Part.

(10) 40Subsections (3) and (4) of section 108 of TMA 1970 (responsibility of
company officers: meaning of “proper officer”) apply for the
purposes of subsection (9) as they apply for the purposes of that
section.

269ZT Group allowance allocation statement: submission

(1) 45A company must submit a group allowance allocation statement to
HMRC for each of its accounting periods in which it is the nominated
company in relation to a group.

This is subject to subsections (2) and (3).

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(2) If a company ceases to be the nominated company in relation to a
group before it submits a group allowance allocation statement to
HMRC for an accounting period—

(a) that company may not submit the statement, and

(b) 5the company that is for the time being the nominated
company in relation to the group must do so.

(3) But if a new group allowance nomination in respect of the group
takes effect on a date before it is made, that does not affect the
validity of the submission of any group allowance allocation
10statement submitted before the date the new nomination is made.

(4) A group allowance allocation statement under this section must be
received by HMRC before the first anniversary of the filing date for
the company tax return for the accounting period to which the
statement relates.

(5) 15A group allowance allocation statement under this section may be
submitted at a later time if an officer of Revenue and Customs allows
it.

(6) A group allowance allocation statement under this section must
comply with the requirements of section 269ZV.

269ZU 20 Group allowance allocation statement: submission of revised
statement

(1) This section applies if a group allowance allocation statement has
been submitted under section 269ZT, or this section, in respect of an
accounting period of a company that is, or was, a nominated
25company (“the nominee’s accounting period”).

(2) A revised group allowance allocation statement in respect of the
nominee’s accounting period may be submitted to HMRC by the
company that is for the time being the nominated company in
relation to the group.

(3) 30But if a new group allowance nomination in respect of the group
takes effect on a date before it is made, that does not affect the
validity of the submission of any revised group allowance allocation
statement submitted before the date the new nomination is made.

(4) A revised group allowance allocation statement may be submitted
35on or before whichever is the latest of the following dates—

(a) the first anniversary of the filing date for the company tax
return for the nominee’s accounting period,

(b) if notice of enquiry (within the meaning of Schedule 18 to FA
1998) is given into a relevant company tax return, 30 days
40after the enquiry is completed,

(c) if, after such an enquiry, an officer of Revenue and Customs
amends the return under paragraph 34(2) of that Schedule, 30
days after the notice of amendment is issued,

(d) if an appeal is brought against such an amendment, 30 days
45after the date on which the appeal is finally determined.

(5) A revised group allowance allocation statement may be submitted at
a later time if an officer of Revenue and Customs allows it.

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(6) In this section “relevant company tax return” means a company tax
return of a company for an accounting period for which an amount
of group deductions allowance was, or could have been, allocated by
a previous group allowance allocation statement in respect of the
5nominee’s accounting period.

(7) The references in subsection (4) to an enquiry into a relevant
company tax return do not include an enquiry resulting from an
amendment of such a return where—

(a) the scope of the enquiry is limited as mentioned in paragraph
1025(2) of Schedule 18 to FA 1998 (enquiry into amendments
when time limit for enquiry into return as originally
submitted is passed), and

(b) the amendment relates only to the allocation of group
deductions allowance for the nominee’s accounting period.

(8) 15A group allowance allocation statement under this section must
comply with the requirements of section 269ZV.

269ZV Group allowance allocation statement: requirements and effects

(1) This section applies in relation to a group allowance allocation
statement submitted under section 269ZT or 269ZU.

(2) 20The statement must be signed by the appropriate person in relation
to the company giving the statement.

(3) The statement must—

(a) identify the group to which it relates,

(b) specify the accounting period, of the company that is or was
25the nominated company, to which the statement relates (“the
nominee’s accounting period”),

(c) specify the days in the nominee’s accounting period on
which that company was the nominated company in relation
to the group or state that that company was the nominated
30company throughout the period,

(d) state the group deductions allowance the group has for the
nominee’s accounting period,

(e) list one or more of the companies that were members of the
group and within the charge to corporation tax in the
35nominee’s accounting period (“listed companies”),

(f) allocate amounts of the group deductions allowance to the
listed companies, and

(g) for each amount of group deductions allowance allocated to
a listed company, specify the accounting period of the listed
40company for which it is allocated.

(4) An amount of group deductions allowance allocated to a listed
company must be allocated to that company for an accounting
period that falls wholly or partly in the nominee’s accounting period.

(5) The maximum amount of group deductions allowance that may be
45allocated, by the group allowance allocation statement, to a listed
company for an accounting period of that company is—


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where—

  • “DAP” is the number of days in the accounting period of the
    listed company that are—

    (a)

    days in the nominee’s accounting period, and

    (b)

    5days on which the company was a member of the
    group,

  • “DNAP” is the number of days in the nominee’s accounting
    period, and

  • “GSA” is the group deductions allowance of the group for the
    10nominee’s accounting period.

(6) The sum of the amounts allocated to listed companies by the group
allowance allocation statement may not exceed the group deductions
allowance for the nominee’s accounting period.

(7) If a group allowance allocation statement is submitted that does not
15comply with subsection (5) or (6), the company that is, for the time
being, the nominated company in relation to the group must submit
a revised group allowance allocation statement that does comply
with those subsections within 30 days of the date on which the group
allowance allocation statement that did not comply was submitted or
20within such further period as an officer of Revenue and Customs
allows.

(8) If a group allowance allocation statement—

(a) complies with those subsections when it is submitted, but

(b) subsequently ceases to comply with either of them,

25the company that is, for the time being, the nominated company in
relation to the group must submit a revised group allowance
allocation statement that does comply with those subsections within
30 days of the date on which the group allowance allocation
statement ceased to comply with one of those subsections or within
30such further period as an officer of Revenue and Customs allows.

(9) If a company fails to comply with subsection (7) or (8), an officer of
Revenue and Customs may by written notice to the company amend
the group allowance allocation statement as the officer thinks fit for
the purpose of making it comply with subsections (5) and (6).

(10) 35An officer of Revenue and Customs who issues a notice under
subsection (9) to a company must, at the same time, send a copy of
the notice to each of the listed companies.

(11) The time limits otherwise applicable to the amendment of a company
tax return do not apply to any such amendment to the extent that it
40is made in consequence of a group allowance allocation statement
being submitted in accordance with section 269ZT or 269ZU.

(12) The Commissioners for Her Majesty’s Revenue and Customs may by
regulations make further provision about a group allowance
allocation statement including, in particular, provision—

(a) 45about the form of a statement and the manner in which it is
to be submitted,

(b) requiring a person to give information to HMRC in
connection with a statement,

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(c) as to the circumstances in which a statement that is not
received by the time specified in section 269ZU(4) is to be
treated as if it were so received, and

(d) as to the circumstances in which a statement that does not
5comply with the requirements of this section is to be treated
as if it did comply.

269ZW Deductions allowance for company not in a group

(1) This section makes provision as to the deductions allowance of a
company for an accounting period where section 269ZR (deductions
10allowance for company in a group) does not apply.

(2) The company’s deductions allowance for the accounting period is
£5,000,000.

(3) If the accounting period is less than 12 months, the company’s
deductions allowance for the period is proportionally reduced.

269ZX 15 Increase of deductions allowance where provision for onerous lease
reversed

(1) This section applies if—

(a) a relevant reversal credit (see section 269ZY) is brought into
account in calculating a company’s specified profits for an
20accounting period, and

(b) the amount of the company’s specified profits for the
accounting period is greater than nil.

(2) For the purposes of this section a company’s “specified profits” for
an accounting period are the sum of—

(a) 25the company’s total profits for the accounting period,
calculated with the modifications set out in section 269ZF(4),
and

(b) any I-E profit of the company for the accounting period.

(3) The company’s deductions allowance for the accounting period (as
30determined in accordance with section 269ZR or 269ZW) is to be
treated (for all purposes) as increased by—

(a) the amount of the relevant reversal credit, or

(b) if lower, the amount of the specified profits.

269ZY Meaning of “relevant reversal credit”

(1) 35For the purposes of section 269ZX a “relevant reversal credit” is a
credit, or other income, brought into account in respect of the
relevant reversal (see subsections (3) and (5)) of a relevant onerous
lease provision.

(2) A provision in the accounts of a company (“C”) is a “relevant onerous
40lease provision” if—

(a) the provision relates to a lease of land under which C is the
tenant (and “L” is the landlord),

(b) the provision is required, for accountancy purposes, as a
provision for an onerous lease, and

(c) 45the lease was entered into at arm’s length.

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(3) The reversal (in whole or in part) of a relevant onerous lease
provision is a “relevant reversal” if—

(a) the reversal is required for accountancy purposes as a result
of an arrangement (“C’s arrangement”) made at arm’s length
5under which C’s obligations under the lease are varied or
cancelled,

(b) subsection (4) does not apply, and

(c) at least one of conditions X, Y and Z in subsection (7) is met.

(4) This subsection applies if—

(a) 10C and L are connected at the time when C’s arrangement is
made, or

(b) the landlord who granted the lease (whether that was L or
another person) and the tenant to whom it was granted
(whether that was C or another person) were connected at the
15time when the lease was granted.

(5) The reversal (in whole or in part) of a relevant onerous lease
provision is a “relevant reversal” if—

(a) the lease has been granted out of a lease (“the superior
lease”),

(b) 20L and C are members of the same group of companies,

(c) the reversal would be a relevant reversal by virtue of
subsection (3) if the condition in subsection (3)(b) (lack of
connection between C and L) were met,

(d) the terms of C’s arrangement substantially reflect those of an
25arrangement (“L’s arrangement”) made at arm’s length
under which L’s obligations under the superior lease are
varied or cancelled, and

(e) subsection (6) does not apply.