INTM167300 | UK residents with foreign income or gains: corporation tax: Loan relationships: relief for foreign tax: identification of UK tax: Example 6

From HM Revenue & Customs · International Manual

There are credits relating to interest which has suffered foreign tax but a loan relationship deficit overall, the whole of which the company surrenders as group relief or carries back or forwards to other accounting periods under CTA09/S459 or S457:

The figures are as in example 5 (see INTM167290). The company claims to treat the whole of the deficit of £1,000 in one or more of the ways indicated.

For the purpose of allowing credit relief in respect of the foreign interest of £500 the computation is restated to show UK tax chargeable on the credits of £500 + £600 + £800 and to show separately debits of £1,900 (i.e. the aggregate of the debits of £2,900 less the amount of the deficit £1,000 to which the claims for relief under CTA09/S459 and S457 relate) which are then treated as available to be set against profits of any description for that accounting period under TIOPA10/S52. Taking account of other profits for the accounting period the result would be as follows

-TradeLoan Relationship-Property IncomeForeign dividendTotal
Profits2,000Nil-5001,0003,500
Restated asTradeLoan Relationship (i)Other Loan RelationshipProperty IncomeForeign dividendTotal
Profits2,0005001,4005001,0005,400
less Loan Relationship debits (ii)--(1,400)(500)-(1,900)
-2,000500--1,0003,500

Notes:

i) see note (i) to example 1.

ii) see note (ii) to example 1.