OT21056 | Corporation Tax Ring Fence: Losses and Group Relief: Losses Carried Forward: Losses arising after 1 April 2017

The treatment of carried forward losses arising after 1 April 2017 depends on whether these are decommissioning or non-decommissioning losses.

A loss is a decommissioning loss if, and to the extent that, it is attributable to decommissioning expenditure, as defined in FA13/S81. This is the definition used for decommissioning relief agreements.

A loss is a non-decommissioning loss if, and to the extent that, it is not a decommissioning loss as defined above. (CTA10/S303A(2)(4) and (5)).

Example

If a company has a loss of £1,000,000, and it incurred £700,000 on decommissioning expenditure as defined in FA13/S81(1), then £700,000 of the loss is a decommissioning loss, and £300,000 is a non-decommissioning loss.

If the same company only had an overall loss of £400,000, the entire £400,000 loss would be a decommissioning loss, because it is attributable to decommissioning expenditure as defined.