SolvedCTM81625 | Groups: group relief: surrendering company not UK resident: examples: comparison of UK and EEA loss
From HM Revenue & Customs · Company Taxation Manual
Example 1
Assume there are differences between UK and foreign measures of income and expenditure. Accounting standards for example may differ concerning recognition of income.
Foreign computation
| Description | Amount |
|---|---|
| Foreign trading loss | (£200) |
| Unrelievable foreign loss | (£200) |
UK recomputation
| Description | Amount |
|---|---|
| UK trading loss (because of UK GAAP conversion*) | (£50) |
| UK measure of losses available for group relief | (£50) |
*Because of differences in income recognition in UK GAAP versus foreign state accounting rules.
The amount of the trading loss available for surrender is the amount computed on UK tax principles. The amount here is £50.
Example 2
Foreign computation
| Description | Amount |
|---|---|
| Foreign trading loss | (£200) |
| Unrelievable foreign loss | (£200) |
UK recomputation
| Description | Amount |
|---|---|
| UK trading loss (e.g. because of timing differences*) | (£350) |
| UK measure of losses available for group relief | (£350) |
*(If the differences between the UK and foreign measure of income result from timing issues, so the additional £150 of loss would either have already been recognised in the foreign territory in an earlier period or will be recognised in a later period and so possibly be relievable in a future period.)
The amount of the trading loss available for surrender is £200.