CTM82010 | Corporation Tax: Group relief for carried-forward losses: General

CTA10/PART5A

From 1 April 2017, companies can surrender certain types of carried-forward losses to another company in the same group relief group (see CTM80151).

Part 5A is modelled on Part 5 and extends the group relief rules, so that companies can claim group relief for losses that have been carried forward from a previous accounting period. This only applies to losses that are incurred on or after 1 April 2017.

Previously, companies could only claim group relief for losses incurred by another group member in a corresponding accounting period. This rule still applies for losses incurred before 1 April 2017.

There are certain restrictions on the types of losses that can be surrendered as group relief for carried-forward losses. There are also some restrictions on the amount of carried-forward losses that a company can surrender, the unused part of the surrenderable amounts, and restrictions on the amount of profit a company has available for relief, the relevant maximum.

General restriction on use of all carried-forward losses

The total amount of relief a company can obtain using carried-forward losses is limited by the restriction on deductions. This applies to group relief for carried-forward losses as well as to the company’s own losses carried forward. A company cannot use group relief for carried-forward losses to obtain any additional relief beyond the amount permitted by the restriction. (CTA10/S269ZD(3)(j)).

A company may also only claim or surrender group relief for carried-forward losses once it has used its own losses as far as possible.

Restriction for group relief for carried forward losses following a change in ownership of a company

CTA10/PART14/Chapters 2C and 2D additionally restrict the relief for pre-acquisition losses surrendered as group relief for carried-forward losses by a company whose ownership has changed. (See CTM06715)

Administrative requirements

The administrative requirements for group relief, such as making a claim and returns, are set out in FA98/SCH18. These requirements apply to group relief for carried-forward losses. It also introduces additional requirements for notice of consent for claims to group relief for carried-forward losses.

Joint Amended Returns

Regulation 10 of Statutory Instrument 1999/2975, as amended by SI2018/9, provides that an authorised company can claim and surrender group relief for carried-forward losses on behalf of companies in the group. This works in the same way as a joint amended return does for group relief for losses of the same year. However, the regulations require companies to make a further application in order to use the simplified procedures for group relief for carried-forward losses.