CTM06825 - Corporation Tax: loss buying: restriction of group relief for carried-forward losses: consortia

CTA10/S676CC to S676CD

S676CC to S676CD are concerned with situations where there has been a change in company ownership and, immediately before that change, the transferred company was owned by a consortium.

Prior to the change in ownership, the transferred company, company C, and another company, company X, may have met one of the consortium conditions.聽 As a result, they may have been able to surrender losses to or claim losses from another company for group relief for carried-forward losses (CTA10/PART5A).

In some circumstances, the change in ownership may effectively sever the relationship between the company and the consortium for the purposes of CTA10/PART5A.聽 Once its ownership has changed, company C may no longer be in a position to surrender losses to, or claim losses from, company X or any other company in relation to which it previously met one of the consortium conditions.聽 In these circumstances, CTA10/S676CC to S676CD have no application.

But this will not always be the case.聽 For example, company C and company X may meet a consortium condition before the change and a group claim condition (CTA10/S188CE and S188FB, CTA10/PART5/CHAPTER5) after the change in ownership.

If

  • immediately before the change in ownership, company C and company X meet one of the consortium conditions, and
  • following the change in ownership, company C and company X are still in a position where one company might potentially surrender to or claim losses from the other company under CTA10/PART5A

CTA10/S676CC to S676CD control the reliefs available.

In these circumstances

  • CTA10/S676CC governs the amount of relief the transferred company is able to claim, and
  • CTA10/S676CD governs the amount of relief the transferred company is able to surrender.

Only the reliefs restricted more generally by CTA10/CHAPTER2C are affected.

Broadly, these are reliefs for losses incurred before the change in ownership and carried forward under one of a number of provisions (CTA10/S676CH).

Losses incurred after the change in ownership are not restricted by either CTA10/S676CC or S676CD.