CTM34600 - Residence: dual resident companies: anti-avoidance - limitation of group relief
Losses or other amounts are not available for set-off under the group relief provisions if the company that would be the surrendering company is a dual resident investing company.聽 Group relief is denied in respect of amounts listed at CTA10/S99 (1), namely
- a trading loss,
- a capital allowance excess,
- a non trading loan relationships deficit,
- amounts allowable as qualifying charitable donations,
- a UK property business loss,
- management expenses, and
- a non-trading loss on intangible fixed assets.
Example
A, B and C are companies in a multinational group.
Company A is UK incorporated and UK resident.
Company B is a dual resident investing company and is US incorporated and UK resident.
Company C is US incorporated and US resident.
Company A and Company B are members of a UK sub-group.
Company B and Company C are members of a US sub-group.
Company A and Company C each have profits of 拢100.
Company B has a loss of 拢100.
In the past years Company B could set its loss against Company A's profits, as well as against Company C's profits (and so obtain relief of 拢200 altogether).
Under CTA10/S109 (2) Company B's loss is not available for set-off against Company A's profits.
From 1 April 2017, similar rules apply to group relief for carried-forward losses at CTA10/S188BJ.