tax trading losses

Corporation Tax Trading Losses: Individual Company and Group Relief

New guide helps handle group trading losses. 


Last month, we highlighted guidance on early relief from corporation tax in situations where trading losses are anticipated due to the current economic downturn in relation to Covid-19.


While the government has put into place various measures to help businesses survive the effects of the pandemic on their trading results, it is becoming more evident that many businesses will have incurred or anticipate trading losses.


We have prepared a short guide that incorporates the trading losses early relief as highlighted in the above article. This now includes further guidance on situations where group relief might also be considered to apply and taken advantage of by a group or consortium of companies.


The in-year group relief rules are contained in Part 5 of CTA 2010, whilst the carry-forward group relief rules are contained in part 5A of CTA 2010. Under both sets of rules, there is a concept of an ‘overlapping period’ for which losses can be surrendered, as follows:


Subject to various restrictions, limits and order of relief, a claim for group relief is possible where the ‘surrendering company’ consents to the claim and the claimant company and the surrendering company are in the same (75%) group for an ‘overlapping period’. An overlapping period is a period of at least one day in common between ‘the claim period’ and ‘the surrender period’.


The claim period is the accounting period of the claimant company for which it claims group relief. The surrender period is the accounting period of the surrendering company to which the losses and other amounts have been carried forward to.  The surrendering company means the company that has the losses or other amounts.


View the guide on corporation tax trading losses claims now


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