CTM80255 - Groups: group relief: non coinciding accounting periods or group relationships: example
ICTA88/S403A
This example shows the operation of Section 403A ( CTM80210 and CTM80215).
| Company | Accounting period | |
| A | 12 months to 31/12/01 | Profit £72,000 |
| B | 12 months to 31/12/01 | Loss £100,000 |
| C | 6 months to 30/6/01 | Profit £5,000 |
| D | 12 months to 30/9/01 | Loss £120,000 |
| E | 12 months to 31/3/02 | Profit £160,000 |
A, B, C and D are in a group relationship throughout. E joined
the group on 1/6/01.
C claims group relief from D.
A claims from D and then from B.
E claims from D and then from B.
C’s claim from D (no prior surrenders or claims)
The overlapping period (
CTM80225) is 6 months ended 30/6/01.
D’s ‘unused part of the surrenderable amount for
the overlapping period’ (
CTM80235) is the same as its
‘surrenderable amount for the overlapping period’ (
CTM80230). This is because there have
been no prior surrenders of D’s losses. It is:
| 6/12 | x | £120,000 | = | £60,000 |
C’s ‘unrelieved part of the claimant’s total profits for the overlapping period’ (CTM80235) is also the same as its ‘total profits for the overlapping period’ (CTM80230). This is because it has made no prior claims. It is:
| 6/6 | x | £5,000 | = | £5,000 |
The amount that can be surrendered/claimed is the smaller of these ( CTM80215). It is £5,000.
A’s claim from D (prior surrender)
The overlapping period is 9 months ended 30/9/01.
D’s ‘surrenderable amount for the overlapping
period’ is:
| 9/12 | x | £120,000 | = | £90,000 |
D’s ‘unused part of the surrenderable amount for the
overlapping period’ is this amount less the ‘amount of
any prior surrenders attributable to the overlapping period’
(
CTM80240). Following the steps in
CTM80240:
Step 1
C’s claim from D involves part of D’s
surrenderable amount for accounting period ended 30/09/01.
Step 2
The amount of C’s claim, £5,000, is treated as
being for the overlapping period in that claim, which is 6 months
ended 30/6/01.
The common period of the overlapping periods in C’s
claim and A’s claim is 6 months ended 30/6/01.
The whole of the £5,000 is apportioned to that common
period.
Step 3
The total, £5,000, is the ‘amount of any prior
surrenders attributable to the overlapping period’.
So D’s ‘unused part of the surrenderable amount
for the overlapping period’ is £90,000 less £5,000
which is £85,000.
A’s ‘unrelieved part of the claimant’s
total profits for the overlapping period’ is the same as its
‘total profits for the overlapping period’. This is
because it has made no prior claims. It is:
| 9/12 | x | £72,000 | = | £54,000 |
The amount that can be surrendered/claimed is the smaller of £85,000 and £54,000, which is £54,000.
A’s claim from B (prior claim)
The overlapping period is 12 months ended 31/12/01.
B’s ‘unused part of the surrenderable amount for
the overlapping period’ is the same as its
‘surrenderable amount for the overlapping period’. This
is because there have been no prior surrenders of B’s losses.
It is:
| 12/12 | x | £100,000 | = | £100,000 |
A’s total profits for the overlapping period are £72,000. The ‘unrelieved part of the claimant’s total profits for the overlapping period’ ( CTM80235) is this amount less ‘the amount of any previous claims attributable to the overlapping period’ ( CTM80245). Following the steps in CTM80245:
Step 1
A has claimed from D for the accounting period ended
31/12/01.
Step 2
The amount of that claim, £54,000, is treated as being
for the overlapping period in that claim, which is 9 months ended
30/9/01.
The common period of the overlapping periods in the claim
from D and the claim from B is 9 months ended 30/9/01.
The whole of the £54,000 is apportioned to that common
period.
Step 3
The total, £54,000, is the ‘amount of any
previous claims attributable to the overlapping period’.
So A’s ‘unrelieved part of the claimant’s
total profits for the overlapping period’ is £72,000
less £54,000 which is £18,000.
The amount that can be surrendered/claimed is the smaller of
£100,000 and £18,000, which is £18,000.
E’s claim from D (prior surrenders)
The overlapping period is 4 months ended 30/9/01.
D’s ‘surrenderable amount for the overlapping
period’ is:
| 4/12 | x | £120,000 | = | £40,000 |
D’s ‘unused part of the surrenderable amount for the overlapping period’ is this amount less the ‘amount of any prior surrenders attributable to the overlapping period’. Following the steps in CTM80240:
Step 1
C’s claim from D involves part of D’s
surrenderable amount for accounting period ended 30/9/01.
A’s claim from D involves part of D’s
surrenderable amount for accounting period ended 30/9/01.
Step 2
The amount of C’s claim, £5,000, is treated as
being for the overlapping period in that claim, which is 6 months
ended 30/6/01.
The common period of the overlapping periods in C’s
claim and E’s claim is 1 month ended 30/6/01.
The £5,000 is apportioned to that common period:
| 1/6 | x | £5,000 | = | £833 |
The amount of A’s claim, £54,000, is treated as being
for the overlapping period in that claim, which is 9 months ended
30/9/01.
The common period of the overlapping periods in A’s
claim and E’s claim is 4 months ended 30/9/01.
The £54,000 is apportioned to that common period:
| 4/9 | x | £54,000 | = | £24,000 |
Step 3
The total £24,833 (£833 plus £24,000) is the
‘amount of any prior surrenders attributable to the
overlapping period’.
So D’s ‘unused part of the surrenderable amount
for the overlapping period’ is £40,000 less £24,833
which is £15,167.
E’s ‘unrelieved part of the claimant’s
total profits for the overlapping period’ is the same as its
‘total profits for the overlapping period’. This is
because it has made no prior claims. It is:
| 4/12 | x | £160,000 | = | £53,333 |
The amount that can be surrendered/claimed is the smaller of these. It is £15,167.
E’s claim from B (prior surrender and claim)
The overlapping period is 7 months ended 31/12/01.
B’s ‘surrenderable amount for the overlapping
period’ is
| 7/12 | x | £100,000 | = | £58,333 |
B’s ‘unused part of the surrenderable amount for the overlapping period’ is this amount less the ‘amount of any prior surrenders attributable to the overlapping period’. Following the steps in CTM80240:
Step 1
A’s claim from B involves part of B’s
surrenderable amount for accounting period ended 31/12/01.
Step 2
The amount of A’s claim, £18,000, is treated as
being for the overlapping period in that claim, which is 12 months
ended 31/12/01.
The common period of the overlapping periods in A’s
claim and E’s claim is 7 months ended 31/12/01.
The £18,000 is apportioned to that common period:
| 7/12 | x | £18,000 | = | £10,500 |
Step 3
£10,500 is the ‘amount of any prior surrenders
attributable to the overlapping period’.
So B’s ‘unused part of the surrenderable amount
for the overlapping period’ is £58,333 less £10,500
which is £47,833.
E’s total profits for the 12 month accounting period
to 31/3/02 are £160,000. Its total profits for the overlapping
period are:
| 7/12 | x | £160,000 | = | £93,333 |
The ‘unrelieved part of the claimant’s total profits for the overlapping period’ is this amount less ‘the amount of any previous claims attributable to the overlapping period’. Following the steps in CTM80245:
Step 1
E has claimed from D for the accounting period ended
31/3/02.
Step 2
The amount of that claim, £15,167, is treated as being
for the overlapping period in that claim, which is 4 months ended
30/9/01.
The common period of the overlapping periods in the claim
from D and the claim from B is also 4 months ended 30/9/01.
The whole of the £15,167 is apportioned to that common
period.
Step 3
The total, £15,167, is the ‘amount of any
previous claims attributable to the overlapping period’.
So E’s ‘unrelieved part of the claimant’s
total profits for the overlapping period’ is £93,333
less £15,167 which is £78,166.
The amount that can be surrendered/claimed is the smaller of
£47,833 and £78,166, which is £47,833.
