CTM50835 - Loan relationships: taxing and relieving provisions: relief as group relief

FA96/S83 (2)(b) and FA96/SCH8/PARA2

Where a company has a non-trading deficit in an accounting period it may claim under FA96/S83 (2)(b) for the whole or any part of the deficit to be treated as available for group relief. A claim under FA96/S83 (2)(b) cannot be made for any part of a non- trading deficit brought forward from an earlier period under FA96/S83(3), see CTM50865. Before 1 April 1998 for the purposes of a group relief claim FA96/SCH8/PARA2 (2) treats the amount surrendered as a loss incurred in carrying on a trade. After 1 April 1998 the non-trading deficit is separately identified in ICTA88/S403 (1).

Unlike the rules for surrendering excess charges the amount of the non-trading deficit in respect of loan relationships that may be surrendered as group relief is not restricted to the excess over the profits of the company for the accounting period. This allows companies maximum flexibility, and so enables them to make maximum use of double tax relief. The same principle applies as for a claim under FA96/S83 (2)(a) - see the example at CTM50825 for the effect of ICTA88/S797 (3).

A claim to surrender under FA96/S83 (2)(b) must be made within the period of 2 years following the end of the accounting period in which the deficit arose. Under FA96/S83 (6) the Board may extend the time limit. If a claim is received outside the normal time limit the approach in CTM90610 should be followed, except that difficult cases should be referred to CT&VAT (Technical), where Section 83 (6) is in point.