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. You should note that group relief is denied not only in respect of excess charges, but also in respect of the other kinds of losses mentioned in ICTA88/S403. These are trading losses, excess capital allowances that fall to be given by discharge or repayment, and excess management expenses.

Example

A, B and C are companies in a multinational group.

A is UK incorporated and UK resident.

B is a dual resident investing company and is US incorporated and UK resident.

C is US incorporated and US resident.

A and B are members of a UK sub-group.

B and C are members of a US sub-group.

A and C each have profits of £100.

B has a loss of £100.

In the past years B could set its loss against A's profits, as well as against C's profits (and so obtain relief of £200 altogether).

Under ICTA88/S404 (1), B's loss is not available for set-off against A's profits.