CTM80435 - Groups: group relief: example: surrender of trading losses
Company D is a 75% subsidiary of Company E for the whole of the
accounting period of 12 months to 31 December 2001. The accounting
date of both companies is 31 December.
The accounts and computations of the companies for the 12
months to 31 December 2001 show the following.
| Company D | |
| Trading profits | £3,000 |
| Less losses brought forward (ICTA88/S393 (1)) | £1,500 |
| CT trading income | £1,500 |
| Income from special leasing | £500 |
| Capital allowances in respect of special leasing | £800 |
| Non-trading loan relationship deficit | £600 |
| Company E | |
| Trading loss | £1,000 |
| Profits & gains from non-trading loan relationships | £300 |
Company E claims relief in respect of its trading loss under
ICTA88/S393A.
Company D claims relief in respect of its excess capital
allowances under CAA01/S260 (3). It also claims, with the consent
of Company E, the maximum amount of group relief that Company E can
surrender (ICTA88/S403ZA (1)).
The CT computations for the accounting period to 31 December
2001 are as follows.
| Company D | ||
| Sch D, Case I | £1,500 | |
| Sch D, Case VI (£500 less CAs £500) | Nil | |
| Excess capital allowances | £300 | |
| Non-trading loan relationship deficit | £600 | |
| Group relief claimed | £600 | £1,500 |
| CT profits | Nil | |
| Company E | ||
| Sch D, Case I | Nil | |
| Profits & gains from non-trading loan relationships | £300 | |
| Trading loss ICTA88/S393A | £300 | |
| CT Profits | Nil | |
| Losses to carry forward | ||
| Trading loss | £1,000 | |
| Less utilised ICTA88/S393A | £300 | |
| Surrendered via group relief | £600 | £900 |
| Loss to carry forward | £100 |
Company D could decide not to claim relief for excess capital
allowances under CAA01/S260 (3), and instead carry them forward
under CAA01/S260 (2). If so, the group relief would still be
restricted to £600. This is because you have to take into
account any relief available to the claimant company under
CAA01/S260 (3), whether it is claimed or not (
CTM80400).
However if Company D’s trading profits were £4,000
instead of £3,000, Company E could have decided not to claim
relief of £300 under Section 393A and it would then have been
able to surrender the whole of its trading loss, £1,000, as
group relief. This is because for trade losses there is no
requirement that only the excess over other profits can be
surrendered (
CTM80115).
