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(d) both companies are UK related.

(2) But consortium condition 1 is not met if a profit on a sale within
subsection (3) by the surrendering company would be a trading
receipt of the surrendering company.

(3) 5A sale is within this subsection if it is a sale of—

(a) the share capital the surrendering company owns in the
claimant company, or

(b) if the claimant company is owned by the consortium as a
result of section 153(3) (consortiums involving holding
10companies), the share capital the surrendering company
owns in the holding company in question.

188CG Consortium condition 2

(1) Consortium condition 2 is met if—

(a) the claimant company is a trading company or a holding
15company,

(b) the claimant company is owned by a consortium,

(c) the surrendering company is not a member of the
consortium,

(d) the surrendering company is a member of the same group of
20companies as a third company (“the link company”),

(e) the link company is a member of the consortium,

(f) the surrendering company and the claimant company are
both UK related.

(2) But consortium condition 2 is not met if a profit on a sale within
25subsection (3) by the link company would be a trading receipt of that
company.

(3) A sale is within this subsection if it is a sale of—

(a) the share capital the link company owns in the claimant
company, or

(b) 30if the claimant company is owned by the consortium as a
result of section 153(3) (consortiums involving holding
companies), the share capital the link company owns in the
holding company in question.

188CH Consortium condition 3

(1) 35Consortium condition 3 is met if—

(a) the surrendering company is a trading company or a holding
company,

(b) the surrendering company is owned by a consortium,

(c) the claimant company is a member of the consortium, and

(d) 40both companies are UK related.

(2) But consortium condition 3 is not met if a profit on a sale within
subsection (3) by the claimant company would be a trading receipt of
the claimant company.

(3) A sale is within this subsection if it is a sale of—

(a) 45the share capital the claimant company owns in the
surrendering company, or

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(b) if the surrendering company is owned by the consortium as
a result of section 153(3) (consortiums involving holding
companies), the share capital the claimant company owns in
the holding company in question.

188CI 5 Consortium condition 4

(1) Consortium condition 4 is met if—

(a) the surrendering company is a trading company or a holding
company,

(b) the surrendering company is owned by a consortium,

(c) 10the claimant company is not a member of the consortium,

(d) the claimant company is a member of the same group of
companies as a third company (“the link company”),

(e) the link company is a member of the consortium, and

(f) the claimant company and the surrendering company are
15both UK related.

(2) But consortium condition 4 is not met if a profit on a sale within
subsection (3) by the link company would be a trading receipt of that
company.

(3) A sale is within this subsection if it is a sale of—

(a) 20the share capital the link company owns in the surrendering
company, or

(b) if the surrendering company is owned by the consortium as
a result of section 153(3) (consortiums involving holding
companies), the share capital the link company owns in the
25holding company in question.

188CJ Meaning of “UK related” company

For the purpose of sections 188CE to 188CI a company is UK related
if—

(a) it is a UK resident company, or

(b) 30it is a non-UK resident company carrying on a trade in the
United Kingdom through a permanent establishment.

Giving group relief for carried-forward losses
188CK Deductions from total profits

(1) If a claimant company makes a claim under section 188CB or 188CC,
35the group relief for carried-forward losses is given by the making of
a deduction from the claimant company’s total profits of the claim
period.

(2) In the case of a claim under section 188CB, the amount of the
deduction under subsection (1) is—

(a) 40an amount equal to the surrendering company’s
surrenderable amounts for the surrender period, or

(b) if the claim is in relation to only part of those amounts, an
amount equal to that part.

(3) Subsection (2) is subject to—

(a) 45subsections (6) to (9),

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(b) the limitations set out in Chapter 4, and

(c) section 269ZD (restriction on deductions from total profits).

(4) In the case of a claim under section 188CC, the amount of the
deduction under subsection (1) is—

(a) 5an amount equal to the surrendering company’s
surrenderable amounts for the surrender period that are
attributable to the specified loss-making period, or

(b) if the claim is in relation to only part of those amounts, an
amount equal to that part.

(5) 10Subsection (4) is subject to—

(a) subsections (6) to (9),

(b) the limitations set out in Chapter 5, and

(c) section 269ZD (restriction on deductions from total profits).

(6) A deduction under subsection (1) is to be made—

(a) 15before deductions for relief within subsection (7), but

(b) after all other deductions to be made at Step 2 in section 4(2)
(apart from deductions for group relief for carried-forward
losses on other claims).

(7) The deductions within this subsection are deductions for relief—

(a) 20under section 37 in relation to a loss made in an accounting
period after the claim period,

(b) under section 260(3) of CAA 2001 in relation to capital
allowances for an accounting period after the claim period,
and

(c) 25under section 389 or 463B of CTA 2009 in relation to a deficit
of a deficit period after the claim period.

(8) For the purposes of subsection (6)(b) it is to be assumed that the
claimant company has claimed all relief available to it for the claim
period under section 37 of this Act or section 260(3) of CAA 2001.

(9) 30Corporation tax relief is not to be given more than once for the same
amount, whether—

(a) by giving group relief for carried-forward losses and by
giving some other relief (for any accounting period) to the
surrendering company, or

(b) 35by giving group relief for carried-forward losses more than
once.

CHAPTER 4 Limitations on relief: claims under section 188CB
Introduction
188DA Overview

40This Chapter sets out limitations on the amount of relief which may
be given on a claim under section 188CB.

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General limitation on amount of relief
188DB Limitation on amount of relief applying to all claims under section
188CB

(1) The amount of group relief for carried-forward losses to be given on
5a claim under section 188CB (“the current claim”) is limited to
whichever is the lesser of—

(a) the amount mentioned in subsection (2), and

(b) the amount mentioned in subsection (3).

(2) The amount referred to in subsection (1)(a) is the unused part of the
10surrenderable amounts (see section 188DC).

(3) The amount referred to in subsection (1)(b) is the difference
between—

(a) the claimant company’s relevant maximum for the
overlapping period (see section 188DD), and

(b) 15the amount of previously claimed group relief for carried-
forward losses for the overlapping period (see section
188DE).

188DC Unused part of the surrenderable amounts

(1) The unused part of the surrenderable amounts is the amount equal
20to—

(a) the surrenderable amount for the overlapping period (see
subsection (2)), less

(b) the amount of prior surrenders for that period (see
subsections (3) to (5)).

(2) 25To determine the surrenderable amount for the overlapping
period—

(a) take the proportion of the surrender period included in the
overlapping period, and

(b) apply that proportion to the surrenderable amounts for the
30surrender period.

The surrenderable amount for the overlapping period is the amount
given as a result of paragraph (b).

(3) To determine the amount of prior surrenders for the overlapping
period—

(a) 35identify any prior claims for the purposes of this section (see
subsection (4)), and

(b) take the steps set out in subsection (5) in relation to each such
claim.

The amount of prior surrenders for the overlapping period is the
40total of the previously used amounts given at step 3 in subsection (5)
for all the prior claims.

(4) A claim is a prior claim for the purposes of this section if—

(a) it is either—

(i) a claim under section 188CB by any company which
45relates to the same amounts as the current claim, or

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(ii) a claim under section 188CC by any company which
relates to amounts included in the amounts to which
the current claim relates,

(b) it is made before the current claim, and

(c) 5it has not been withdrawn.

(5) These are the steps referred to in subsection (3)(b) to be taken in
relation to each prior claim.

Step 1

Identify the overlapping period for the prior claim.

10Step 2

Identify any period that is common to the overlapping period for the
current claim and the overlapping period for the prior claim.

If there is a common period, go to step 3.

If there is no common period, there is no previously used amount in
15relation to the prior claim (and ignore step 3).

Step 3

Determine the previously used amount of group relief for carried-
forward losses in relation to the prior claim (see subsection (6)).

(6) To determine the previously used amount of group relief for carried-
20forward losses in relation to a prior claim—

(a) take the proportion of the overlapping period for the prior
claim that is included in the common period identified at step
2 in relation to that claim, and

(b) apply that proportion to the amount of group relief for
25carried-forward losses given on the prior claim.

The previously used amount of group relief for carried-forward
losses in relation to the prior claim is the amount given as a result of
paragraph (b).

(7) For the meaning of the “overlapping period” see section 188DG.

188DD 30 Claimant company’s relevant maximum for overlapping period

(1) The claimant company’s relevant maximum for the overlapping
period is determined as follows—

Step 1

Calculate the claimant company’s relevant maximum for the claim
35period in accordance with section 269ZD(4).

Step 2

Deduct from that amount the sum of—

(a) any deductions made by the company for the claim period

    • (i)

      under section 45(4)(b) or 45B(4), or

      (ii)

      40under section 303B or 303D by virtue of section 304(5),

(b) any deductions made by the company for the claim period
under section 457(3) or 463H(5) of CTA 2009,

(c) any deductions made by the company for the claim period
under section 124(5), 124A(5) or 124C(6) of FA 2012, and

(d) 45any deductions made by the company for the claim period
which are deductions within any of paragraphs (a) to (i) and
(k) of section 269ZD(3).

Step 3

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Take the proportion of the claim period included in the overlapping
period and apply that proportion to the amount arrived at under
step 2.

(2) In step 2 of subsection (1)—

(a) 5in paragraph (a)(i), the references to deductions under
section 45(4)(b) or 45B(4) do not include 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
10(losses of film trade),

(ii) section 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) 15section 1217MA(3) or 1217MC(9) of that Act (losses of
theatrical 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
20of museum or gallery exhibition trade),

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

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

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

(x) 25section 356NJ(2) (pre-1 April 2017 loss arising from oil
contractor activities);

(b) in paragraph (b) the reference to a deduction under section
463H(5) does not include the deduction of a shock loss.

(3) If the amount of the claimant company’s relevant profits for the
30claim period (calculated in accordance with section 269ZD(5)) is less
than the amount of the claimant company’s deductions allowance
for the claim period (determined in accordance with section
269ZD(6)), subsection (1) has effect as if step 1 was modified as
follows—

35Step 1

Calculate the claimant company’s relevant profits for the claim
period in accordance with section 269ZD(5).

(4) If section 269ZD has effect in relation to the claimant company for the
claim period with the modifications set out in section 269ZE(1)
40(special loss cap for insurance companies in certain cases), subsection
(1) has effect as if steps 1 and 2 were modified as follows—

Step 1

Determine, in accordance with section 269ZE(5), the modified loss
cap for the claimant company and the claim period.

45Step 2

Reduce that amount by the total of any deductions made by the
claimant company for the claim period which are deductions within
any of paragraphs (a) to (i) and (k) of section 269ZD(3).

(5) Subsection (2) is to be ignored if subsection (3) applies.

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188DE Previously claimed group relief for carried-forward losses

(1) To determine the amount of previously claimed group relief for
carried-forward losses for the overlapping period—

(a) identify any prior claims for the purposes of this section (see
5subsection (2)), and

(b) take the steps set out in subsection (3) in relation to each such
claim.

The amount of previously claimed group relief for carried-forward
losses for the overlapping period is the total of the previously
10claimed amounts given at step 3 in subsection (3) for all the prior
claims.

(2) A claim is a prior claim for the purposes of this section if—

(a) it is a claim under section 188CB or 188CC by the claimant
company for group relief for carried-forward losses which
15would be given by way of a deduction from the company’s
total profits of the claim period,

(b) it is made before the current claim, and

(c) it has not been withdrawn.

(3) These are the steps referred to in subsection (1)(b) to be taken in
20relation to each prior claim.

Step 1

Identify the overlapping period for the prior claim.

Step 2

Identify any period that is common to the overlapping period for the
25current claim and the overlapping period for the prior claim.

If there is a common period, go to step 3.

If there is no common period, there is no previously claimed amount
in relation to the prior claim (and ignore step 3).

Step 3

30Determine the previously claimed amount of group relief for carried
forward losses in relation to the prior claim (see subsection (4)).

(4) To determine the previously claimed amount of group relief for
carried-forward losses in relation to a prior claim—

(a) take the proportion of the overlapping period for the prior
35claim that is included in the common period identified at step
2 in relation to that claim, and

(b) apply that proportion to the amount of group relief for
carried-forward losses given on the prior claim.

The previously claimed amount of group relief for carried-forward
40losses in relation to the prior claim is the amount given as a result of
paragraph (b).

188DF Sections 188DC to 188DE: supplementary

(1) If two or more claims for group relief for carried-forward losses are
made at the same time, for the purpose of section 188DC and 188DE
45treat the claims as made—

(a) in such order as the company making them may elect or the
companies making them may jointly elect, or

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(b) if no such election is made, in such order as an officer of
Revenue and Customs may direct.

(2) For the purpose of step 3 in each of section 188DC(5) and 188DE(3)
the amount of group relief for carried-forward losses given on a prior
5claim is determined on the basis that relief is given on the claim
before it is given on any later claim.

(3) If the use of any proportion mentioned in subsection (4), would, in
the circumstances of a particular case, produce a result that is unjust
or unreasonable, the proportion is to be modified so far as necessary
10to produce a result that is just and reasonable.

(4) The proportions are those found in—

(a) section 188DC(2),

(b) section 188DC(6),

(c) step 3 in section 188DD(1), and

(d) 15section 188DE(4)

188DG Sections 188DC and 188DE: meaning of “the overlapping period”

(1) In sections 188DC and 188DE “the overlapping period”, in relation to
a claim for group relief for carried-forward losses, means the period
that is common to the claim period and the surrender period (see
20Requirement 2 in section 188CB(3) and Requirement 2 in section
188CC(3)).

(2) But if during any part of the overlapping period the relief condition
is not met, that part is treated as not forming part of the overlapping
period but instead as forming—

(a) 25a part of the surrender period that is not included in the
overlapping period, and

(b) a part of the claim period that is not included in the
overlapping period.

(3) The relief condition is the condition on which the claim for group
30relief for carried forward losses is based, that is—

  • the group condition,

  • consortium condition 1,

  • consortium condition 2,

  • consortium condition 3, or

  • 35consortium condition 4.

Further limitations on amount of relief if claim based on consortium conditions 1 or
2
188DH Condition 1: ownership proportion

(1) This section applies if—

(a) 40the claimant company makes a claim under section 188CB for
group relief for carried-forward losses, and

(b) the claim is based on consortium condition 1.

(2) The relief to be given on the claim is limited to the ownership
proportion of the claimant company’s relevant maximum for the

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overlapping period (see section 188DD to determine the claimant
company’s relevant maximum for the overlapping period).

(3) The ownership proportion is the same as the lowest of the following
proportions prevailing during the overlapping period—

(a) 5the proportion of the ordinary share capital of the claimant
company that is beneficially owned by the surrendering
company,

(b) the proportion of any profits available for distribution to
equity holders of the claimant company to which the
10surrendering company is beneficially entitled,

(c) the proportion of any assets of the claimant company
available for distribution to such equity holders on a winding
up to which the surrendering company would be beneficially
entitled, and

(d) 15the proportion of the voting power in the claimant company
that is directly possessed by the surrendering company.

(4) If any of the proportions in subsection (3) changes during the
overlapping period, use the average of that proportion during that
period.

(5) 20If the claimant company is owned by the consortium company as a
result of section 153(3) (consortium company involving holding
companies), references in subsection (3) to the claimant company are
to be read as references to the holding company in question.

(6) In this section “the overlapping period” is to be read in accordance
25with section 188DG.

(7) Chapter 6 of Part 5 (equity holders and profits or assets available for
distribution) applies for the purposes of subsection (3)(b) and (c).

188DI Condition 2: ownership proportion

(1) This section applies if—

(a) 30the claimant company makes a claim under section 188CB for
group relief for carried-forward losses, and

(b) the claim is based on consortium condition 2.

(2) The limitation on relief in section 188DH applies in relation to the
claim, but for this purpose references in section 188DH(3) to the
35surrendering company are to be read as reference to the link
company.

188DJ Condition 2: companies in link company’s group

(1) Where—

(a) the claimant company makes a claim under section 188CB,
40and

(b) the claim is based on consortium condition 2,

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

(2) There is a limit on the amount of group relief for carried-forward
45losses that can be given, in total, to the claimant company for the
claim period on consortium claims made in relation to losses and

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other amounts surrendered by the link company and group
companies.

(3) That limit is the same as the limit that, as a result of section 188DH(2),
would apply for the purposes of a consortium claim made by the
5claimant company for the claim period in relation to losses or other
amounts surrendered by the link company, assuming that the link
company was UK related.

(4) In determining the limit that would apply as a result of section
188DH(2) it is to be assumed that the accounting period of the link
10company is the same as the accounting period of the claimant
company.

(5) In this section—

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

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

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

188DK 20 Conditions 1 and 2: claimant company not controlled by
surrendering company etc

(1) This section applies if—

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

(b) 25the claim is based on consortium condition 1, and

(c) during any part of the overlapping period, arrangements
within subsection (3) are in place which enable a person to
prevent the surrendering company, either alone or together
with one or more other companies that are members of the
30consortium, from controlling the claimant company.

(2) This section also applies if—

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

(b) the claim is based on consortium condition 2, and

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

(3) 40Arrangements are within this subsection if—

(a) the company, either alone or together with one or more other
companies that are members of the consortium, would
control the claimant company, but for the existence of the
arrangements, and

(b) 45the arrangements form part of a scheme the main purpose, or
one of the main purposes, of which is to enable the claimant
company to obtain a tax advantage under this Chapter.