Finance Bill (HL Bill 71)

(and for this purpose it is to be assumed that the maximum possible
claim is made in each case).

(5) Before determining the maximum amount of potential group relief
for carried-forward losses under subsection (4), take account of any
5claim made before the current claim that—

(a) is a claim for group relief for carried-forward losses based on
the group condition, and

(b) is in relation to losses or other amounts surrendered by a
member of the same group of companies as the surrendering
10company (other than the surrendering company itself).

(6) The fraction mentioned in step 2 in subsection (3) is—

where—

A is the sum of the surrendering company’s surrenderable
15amounts for the surrender period that are attributable to the
specified loss-making period, and

B is the sum of all the surrendering company’s surrenderable
amounts for the surrender period.

CHAPTER 6 20Miscellaneous provisions and interpretation of Part

Miscellaneous

188FA Payments for group relief for carried-forward losses

(1) This section applies if—

(a) the surrendering company and the claimant company have
25an agreement between them in relation to losses and other
amounts of the surrendering company (“the agreed loss
amounts”),

(b) group relief for carried-forward losses is given to the
claimant company in relation to the agreed loss amounts, and

(c) 30as a result of the agreement the claimant company makes a
payment to the surrendering company that does not exceed
the total amount of the agreed loss amounts.

(2) The payment—

(a) is not to be taken into account in determining the profits or
35losses of either company for corporation tax purposes, and

(b) for corporation tax purposes is not to be regarded as a
distribution.

Interpretation

188FB Subsidiaries, groups and consortiums

40Chapter 5 of Part 5 (which explains certain key concepts for the
purposes of Part 5, including (in particular) how to determine if a
company is a member of a group of companies or is a member of, or

is owned by a consortium) applies for the purposes of this Part as it
applies for the purposes of Part 5.

188FC “Trading company” and “holding company”

(1) In this Part “trading company” means a company the business of
5which consists wholly or mainly in the carrying on of a trade.

(2) In this Part “holding company” means a company the business of
which consists wholly or mainly in the holding of shares or securities
that—

(a) are its 90% subsidiaries, and

(b) 10are trading companies.

188FD Other definitions

(1) In this Part—

• “the claimant company” has the meaning given by section
  188CB(2) or 188CC(2),

• 15“the claim period” has the meaning given by section 188CB(2) or
  188CC(2),

• “company” means any body corporate,

• “group relief for carried-forward losses” has the meaning given
  by section 188AA(4),

• 20“profits” means income and chargeable gains, except in so far as
  the context otherwise requires,

• “shock loss” has the meaning given by section 269ZK,

• “Solvency 2 insurance company” means an insurance company
  as defined in section 269ZP(2),

• 25“the specified loss-making period”, in relation to a claim for
  group relief for carried forward losses made under section
  188CC, has the meaning given by subsection (2) of that
  section,

• “the surrenderable amounts” has the meaning given by section
  30188BB(7),

• “surrendering company” has the meaning given by 188BB(7),
  and

• “the surrender period” has the meaning given by section
  188BB(7).

(2) 35In this Part, except in so far as the context otherwise requires—

(a) references to a trade include an office, and

(b) reference to carrying on a trade include holding an office.”

Part 4 Insurance companies: carrying forward BLAGAB trade losses

24 40Chapter 9 of Part 2 of FA 2012 (relief for BLAGAB trade losses) is amended
as follows.

25 (1) Section 124 (carry forward of BLAGAB trade losses against subsequent
profits) is amended as follows.

(2) In the heading, after “of” insert “pre-1 April 2017”.

(3) In subsection (1), after “accounting period” insert “beginning before 1 April
2017”.

(4) In subsection (5), at the end insert “(but see also section 124D)”.

26 After section 124 insert—

“124A 5 Carry forward of post-1 April 2017 BLAGAB trade losses against
subsequent profits

(1) This section applies if—

(a) an insurance company carrying on basic life assurance and
general annuity business makes a BLAGAB trade loss for an
10accounting period beginning on or after 1 April 2017 (“the
loss-making period”),

(b) relief under—

• section 37 of CTA 2010 (as applied by section 123), or

• Part 5 of CTA 2010 (group relief) (as applied by section
  15125),

is not given for an amount of the loss (“the unrelieved
amount”), and

(c) the company continues to carry on basic life assurance and
general annuity business in the next accounting period (“the
20later period”).

(2) The unrelieved amount is carried forward to the later period.

(3) Relief for the unrelieved amount is given to the company in the later
period if the company has a BLAGAB trade profit for the later
period.

(4) 25The relief is given as set out in subsection (5).

(5) For the purposes of—

(a) section 93 (minimum profits charge), and

(b) section 104 (policyholders’ rate of tax),

the BLAGAB trade profit of the later period is reduced by the
30unrelieved amount (but see also section 124D).

(6) Relief under this section is subject to restriction or modification in
accordance with section 137(7) of CTA 2010 and other applicable
provisions of the Corporation Tax Acts.

124B Excess carried forward post-1 April 2017 losses: relief against total
35profits

(1) This section applies if—

(a) an amount of an insurance company’s BLAGAB trade loss
for an accounting period is carried forward to an accounting
period of the company (“the later period”) under section
40124A(2) or 124C(3), and

(b) any of that amount (“the unrelieved amount”) is not
deducted under section 124A(5) or 124C(6) (as the case may
be) from the company’s BLAGAB trade profit (if any) of the
later period.

(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, or any part of it specified in the claim, from the
5company’s total profits of the later period.

(4) But (if the company is a Solvency 2 insurance company)—

(a) the company may not make a claim under this section if the
unrelieved amount is wholly a shock loss, and

(b) the company may not make a claim specifying a part of the
10unrelieved amount if that part is (to any extent) a shock loss.

(5) For the purposes of subsection (4) assume that in any use by the
company of the BLAGAB trade loss for relief under—

(a) section 37 of CTA 2010 (as applied by section 123),

(b) Part 5 of CTA 2010 (as applied by section 125), or

(c) 15section 124A(5) or 124C(6),

any part of it that is a shock loss is used before any part of it that is
not a shock loss.

(6) A claim under this section must be made—

(a) within the period of two years after the end of the later
20period, or

(b) within such further period as an officer of Revenue and
Customs may allow.

(7) Relief under this section is subject to restriction or modification in
accordance with section 137(7) of CTA 2010 and other applicable
25provisions of the Corporation Tax Acts.

(8) In this section—

• “Solvency 2 insurance company” means an insurance
  undertaking, a reinsurance undertaking or a third-country
  insurance undertaking;

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

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

• “Solvency 2 Directive” means Directive 2009/138/EC of the
  35European Parliament and the Council of 25 November 2009
  on the taking-up and pursuit of the business of Insurance and
  Reinsurance (Solvency II);

• “shock loss” has the meaning given by section 269ZK of CTA
  2010;

• 40“third-country insurance undertaking” means an undertaking
  that has received authorisation under Article 162 of the
  Solvency 2 Directive from the Prudential Regulation
  Authority or the Financial Conduct Authority.

124C Further carry forward against subsequent profits of post-1 April 2017
45loss not fully used

(1) This section applies if—

(a) an amount of an insurance company’s BLAGAB trade loss
for an accounting period is carried forward to an accounting
period (“the later period”) of the company under section
124A(2) or subsection (3) of this section,

(b) 5any of that amount is unrelieved in the later period, and

(c) the company continues to carry on basic life assurance and
general annuity business in the accounting period (“the
further period”) after the later period.

(2) An amount carried forward as mentioned in subsection (1)(a) is
10“unrelieved in the later period” so far as it is not—

(a) deducted under section 124A(5) or subsection (6) of this
section from the company’s BLAGAB trade profit (if any) of
the later period,

(b) deducted from the company’s total profits of the later period
15on a claim under 124B, or

(c) surrendered by way of group relief for carried-forward losses
under Part 5A of CTA 2010.

(3) So much of the amount mentioned in subsection (1)(a) as is
unrelieved in the later period is carried forward to the further period.

(4) 20Relief for the amount carried forward under subsection (3) (“the
remaining carried forward amount”) is given to the company in the
further period if the company has a BLAGAB trade profit for that
period.

(5) The relief is given as set out in subsection (6).

(6) 25For the purposes of—

(a) section 93 (minimum profits charge), and

(b) section 104 (policyholders’ rate of tax),

the BLAGAB trade profit of the further period is reduced by the
remaining carried forward amount (but see also section 124D).

(7) 30Relief under this section is subject to restriction or modification in
accordance with section 137(7) of CTA 2010 and other applicable
provisions of the Corporation Tax Acts.

124D Restriction on deductions from BLAGAB trade profits

(1) The sum of any deductions made by a company for an accounting
35period under sections 124(5), 124A(5) and 124C(6) may not exceed
the relevant maximum.

But this is subject to subsection (6).

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

(a) 50% of the company’s relevant BLAGAB trade profits for the
40accounting period, and

(b) the company’s BLAGAB trade profits deductions allowance
for the accounting period.

(3) A company’s “relevant BLAGAB trade profits” for an accounting
period are—

(a) 45the company’s BLAGAB trade profit for the accounting
period, less

(b) the company’s BLAGAB trade profits deductions allowance
for the accounting period.

But if the allowance mentioned in paragraph (b) exceeds the profit
mentioned in paragraph (a), the company’s “relevant BLAGAB trade
5profits” for the accounting period are nil.

(4) A company’s “BLAGAB trade profits deductions allowance” for an
accounting 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
10BLAGAB trade 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.

(5) An amount specified under subsection (4)(a) as a company’s
15BLAGAB trade 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
20sections 269ZB(7)(a) of CTA 2010 (trading profits deduction
allowance) and 269ZC(5)(a) of CTA 2010 (non-trading profits
deduction allowance).

(6) Subsection (1) does not apply to a company for an accounting period
if the company’s BLAGAB trade profit for the accounting period is
25not greater than nil.

(7) Section 269ZB(9) of CTA 2010 gives the meaning of “deductions
allowance” in relation to a company and an accounting period.

124E Section 124D: shock losses excluded from the restriction

(1) Subsection (2) applies where the company making a deduction
30under section 124A(5) or 124C(6) is a Solvency 2 insurance company.

(2) The deduction is to be ignored for the purposes of section 124D(1)
and section 269ZD(2)(b)(iii) of CTA 2010 so far as it is a deduction of
a shock loss.

(3) Where, by virtue of subsection (2), any deductions made by a
35Solvency 2 insurance company for an accounting period would be
ignored for the purposes of section 124D(1), the references in section
124D(3)(a) and (6) to the company’s BLAGAB trade profit have effect
as references to that profit as reduced by those deductions.

(4) In this section “Solvency 2 insurance company” and “shock loss”
40have the same meaning as in section 124B.”

Part 5 Carrying forward trade losses in certain creative industries

Losses of film trade

27 Chapter 4 of Part 15 of CTA 2009 (losses of separate film trade) is amended
5as follows.

28 (1) Section 1209 (restriction on use of losses while film in production) is
amended as follows.

(2) In subsection (2)—

(a) after “45” insert “or 45B”, and

(b) 10for “set against” substitute “deducted from”.

(3) After subsection (2) insert—

“(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate film trade in a subsequent
period, the deduction is to be ignored for the purposes of section
15269ZB of CTA 2010 (restriction on deductions from trading profits).”

29 (1) Section 1210 (use of losses in later periods) is amended as follows.

(2) In subsection (2) after “45” insert “or 45B”.

(3) In subsection (3) for “loss relief” substitute “section 37 and Part 5 of CTA
2010”.

(4) 20In subsection (4) for “Subsection (5) applies” substitute “Subsections (5) and
(5A) apply”.

(5) In subsection (5) after paragraph (a) insert—

“(ab) carried forward under section 45A of that Act to be deducted
from the total profits of a later period,”

(6) 25After subsection (5) insert—

“(5A) A deduction under section 45 or 45B of CTA 2010 which is made in
respect of so much of the loss as is attributable to film tax relief is to
be ignored for the purposes of section 269ZB of that Act (restriction
on deductions from trading profits).”

30 (1) 30Section 1211 (terminal losses) is amended as follows.

(2) In subsection (1)(c)—

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

(b) omit “trade X in”.

(3) In subsection (3) for the words after “treated” to the end substitute “—

(a) 35in a case where the loss could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
against the profits of trade Y of the first accounting period
beginning after the cessation and so on, and

(b) 40in a case where the loss could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Y which has been carried

forward under section 45B of that Act to the first accounting
period beginning after the cessation.”

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) in a case where the amount could have been carried forward
5under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
against the profits of trade Z of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward
10under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Z which has been carried
forward under section 45B of that Act to the first accounting
period beginning after the cessation.”

(5) After subsection (7) insert—

“(7A) 15A deduction under section 45 or 45B of CTA 2010 which is made in
reliance on this section is to be ignored for the purposes of section
269ZB of that Act (restriction on deductions from trading profits).”

Losses of television programme trade

31 Chapter 4 of Part 15A of CTA 2009 (losses of separate television programme
20trade) is amended as follows.

32 (1) Section 1216DA (restriction on use of losses while programme in
production) is amended as follows.

(2) In subsection (2)—

(a) after “45” insert “or 45B”, and

(b) 25for “set against” substitute “deducted from”.

(3) After subsection (2) insert—

“(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate programme trade in a
subsequent period, the deduction is to be ignored for the purposes of
30section 269ZB of CTA 2010 (restriction on deductions from trading
profits).”

33 (1) Section 1216DB (use of losses in later periods) is amended as follows.

(2) In subsection (2) after “45” insert “or 45B”.

(3) In subsection (3) for “loss relief” substitute “section 37 and Part 5 of CTA
352010”.

(4) In subsection (4) for “Subsection (5) applies” substitute “Subsections (5) and
(5A) apply”.

(5) In subsection (5) after paragraph (a) insert—

“(ab) carried forward under section 45A of that Act to be deducted
40from the total profits of a later period,”

(6) After subsection (5) insert—

“(5A) A deduction under section 45 or 45B of CTA 2010 which is made in
respect of so much of the loss as is attributable to television tax relief

is to be ignored for the purposes of section 269ZB of that Act
(restriction on deductions from trading profits).”

34 (1) Section 1216DC (terminal losses) is amended as follows.

(2) In subsection (1)(c)—

(a) 5after “45” insert “, 45A or 45B”, and

(b) omit “trade X in”.

(3) In subsection (3) for the words after “treated” to the end substitute “—

(a) in a case where the loss could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
10were a loss carried forward under that section to be set
against the profits of trade Y of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
15as if it were a loss made in trade Y which has been carried
forward under section 45B of that Act to the first accounting
period beginning after the cessation.”

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) in a case where the amount could have been carried forward
20under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
against the profits of trade Z of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward
25under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Z which has been carried
forward under section 45B of that Act to the first accounting
period beginning after the cessation.”

(5) After subsection (7) insert—

“(7A) 30A deduction under section 45 or 45B of CTA 2010 which is made in
reliance on this section is to be ignored for the purposes of section
269ZB of that Act (restriction on deductions from trading profits).”

Losses of video game trade

35 Chapter 4 of Part 15B of CTA 2009 (losses of separate video game trade) is
35amended as follows.

36 (1) Section 1217DA (restriction on use of losses while video game in
development) is amended as follows.

(2) In subsection (2)—

(a) after “45” insert “or 45B”, and

(b) 40for “set against” substitute “deducted from”.

(3) After subsection (2) insert—

“(3) If the loss is carried forward under section 45 or 45B of CTA 2010 and
deducted from profits of the separate video game trade in a
subsequent period, the deduction is to be ignored for the purposes of

section 269ZB of CTA 2010 (restriction on deductions from trading
profits).”

37 (1) Section 1217DB (use of losses in later periods) is amended as follows.

(2) In subsection (2) after “45” insert “or 45B”.

(3) 5In subsection (3) for “loss relief” substitute “section 37 and Part 5 of CTA
2010”.

(4) In subsection (4) for “Subsection (5) applies” substitute “Subsections (5) and
(5A) apply”.

(5) In subsection (5) after paragraph (a) insert—

“(ab) 10carried forward under section 45A of that Act to be deducted
from the total profits of a later period,”

(6) After subsection (5) insert—

“(5A) A deduction under section 45 or 45B of CTA 2010 which is made in
respect of so much of the loss as is attributable to video games tax
15relief is to be ignored for the purposes of section 269ZB of that Act
(restriction on deductions from trading profits).”

38 (1) Section 1217DC (terminal losses) is amended as follows.

(2) In subsection (1)(c)—

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

(b) 20omit “trade X in”.

(3) In subsection (3) for the words after “treated” to the end substitute “—

(a) in a case where the loss could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
were a loss carried forward under that section to be set
25against the profits of trade Y of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the loss could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
as if it were a loss made in trade Y which has been carried
30forward under section 45B of that Act to the first accounting
period beginning after the cessation.”

(4) In subsection (6) for the words after “treated” to the end substitute “—

(a) in a case where the amount could have been carried forward
under section 45 of CTA 2010 had trade X not ceased, as if it
35were a loss carried forward under that section to be set
against the profits of trade Z of the first accounting period
beginning after the cessation and so on, and

(b) in a case where the amount could have been carried forward
under section 45A or 45B of CTA 2010 had trade X not ceased,
40as if it were a loss made in trade Z which has been carried
forward under section 45B of that Act to the first accounting
period beginning after the cessation.”