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HMRC has announced a consultation on changes to company group relief.

The aim of the draft legislation is to simplify the arrangements for claiming and surrendering group relief for carried-forward losses. For some groups this may mean being able to access losses and use them to their advantage around the group when this would previously have been denied to them.

The current position with group losses

The rules at Part 5 of CTA 2010 concern group relief and allow companies to surrender corporation tax losses to other companies in their group. Losses can only be surrendered in the year in which they arise. This has been a long established position.

What is being proposed?

The proposed new rules at Part 5A of CTA 2010 (introduced by Finance (No. 2) Act 2017) concern group relief for carried-forward losses. They allow companies to surrender carried-forward corporation tax losses to other companies in their group. This means the loss can no longer only be surrendered to other group companies in the year in which it arises.

Points to note

The simplified arrangements entered into after these regulations come into force can only be used for claims and surrenders of group relief for carried-forward losses for accounting periods beginning on or after 1 April 2017.

The amendments provide that the application to use simplified arrangements must specify whether it covers group relief, group relief for carried-forward losses or both and provides for a different form of specimen statement to be provided if the application encompasses group relief for carried-forward losses.

Full details of the draft legislation and how to respond can be found here. The consultation closes on 13 November 2017.