CTM05170 | Corporation tax: restriction on relief for carried-forward losses: deductions allowance procedure for groups

CTA10/S269ZR to CTA10/269ZV

The following pages, from CTM05180 to CTM05220, set out the procedure groups should follow in order to allocate their group deductions allowance (CTM05190) among members of the group (CTM05160).

The procedure is broadly as follows:

All members of the group identify a nominated company (CTA10/S269ZS (1), CTM05180). This nomination specifies the date on which it takes effect (S269ZS (5)). The nomination does not need to be submitted to HMRC, although it should be available if requested.

The nominated company must submit a group allowance allocation statement for each of its accounting periods in which it is the nominated company (S269ZT (1), CTM05200). It may do this by submitting the statement for example in PDF format as an attachment to its tax return.

The amount of the deductions allowance the nominee may allocate to group members is referred to as the group deductions allowance (CTM05190). This amount depends on whether the nomination takes effect part way through the nominated company’s accounting period, or was in place throughout the accounting period.

Where the nominated company has a 12 month accounting period (AP):

• if the nomination takes effect part way through the nominated company’s AP, the nominee calculates how much deductions allowance it may allocate on the group allowance allocation statement for that period by reference to the proportion of the period it spent as the nominee (S269ZS (3)), or

• If the nomination is in place throughout the accounting period, the nominated company may allocate a full £5 million group deductions allowance on the statement (S269ZS (2)).

The amount of deductions allowance the nominated company may allocate is also reduced proportionally if the accounting period is less than 12 months (S269ZS (4)).

The nominated company lists one or more group companies on the group allowance allocations statement (the listed companies) (S269ZV (3)(e)) and allocates the group deductions allowance between them.

The amount of deductions allowance that may be allocated to any one listed company is calculated to reflect:

• the number of days in the nominated company’s accounting period for which the listed company was a member of the group

as a proportion of:

• the number of days in the nominated company’s accounting period.

(S269ZV (5), CTM05210)

The amount of any individual company’s total deductions allowance is also subject to an overall maximum of £5 million per 12 month period (S269ZR (2), CTM05150).