(1) This section applies where a company is eligible for share loss relief.
(2) The company may make a claim for the loss to be deducted in calculating for corporation tax purposes the company's income—
(a) for the accounting period in which the loss is incurred, and
(b) if the claim so requires, for previous accounting periods so far as they fall (wholly or partly) within the period of 12 months ending immediately before the beginning of the accounting period in which the loss is incurred.
(3) The company may make a claim under subsection (2)(b) for any accounting period only if the company was an investment company throughout that period.
(4) A claim for share loss relief must be made before the end of the period of two years after the end of the accounting period in which the loss is incurred.
(1) This subsection explains how deductions in respect of share loss relief claimed by a company under section 70 are to be made.
Step 1
Deduct the loss in calculating the company's income for the accounting period in which the loss is incurred.
Step 2
If not all of the loss can be deducted at Step 1, deduct the remaining loss in calculating the company's income for any accounting period falling (wholly or partly) within the 12 month period that ends immediately before the beginning of the accounting period in which the loss is incurred.
(2) The amount of a deduction to be made at Step 2 for any accounting period is the amount of the loss so far as it cannot be deducted under subsection (1) for a subsequent accounting period.
(3) Subsection (1) is subject to sections 72, 74(5) and 75 (which set limits on the amount of share loss relief that may be obtained in particular cases).
(4) A deduction at Step 2 from the income of an accounting period may be made only after all other deductions have been made from the income for that period in respect of share loss relief given for an earlier loss.
(5) Deductions made on the basis of relief claimed under Part 7 of Schedule 15 to FA 2000 (relief for losses on disposal of shares to which investment relief is attributable) must, in accordance with paragraph 70 of that Schedule, be made before making deductions for share loss relief.
(6) A claim for share loss relief does not affect any claim for a deduction under TCGA 1992 for so much of the allowable loss as is not deducted under subsection (1).
72 Limit on deduction if accounting period falls partly within 12 month period
(1) This section applies if an accounting period falls partly within the period of 12 months ending immediately before the beginning of the accounting period in which the loss is incurred.
(2) The amount of the deduction under Step 2 in section 71(1) for the accounting period is not to exceed an amount equal to the overlapping proportion of the company's income of that period.
(3) The overlapping proportion is the same as the proportion that the part of the accounting period falling within the 12 month period mentioned in subsection (1) bears to the whole of the accounting period.
(1) This section has effect for the purposes of this Chapter.
(2) A company subscribes for shares in another company if they are issued to the company by the other company in consideration of money or money's worth.
(3) If—
(a) a company has subscribed for, or is treated under this subsection as having subscribed for, any shares, and
(b) any corresponding bonus shares are subsequently issued to the company,
the company is treated as having subscribed for the bonus shares.
(4) If—
(a) a company subscribed for any shares (“the original shares”) on a particular date, and
(b) any corresponding bonus shares are treated as having been subscribed for by the company under subsection (3),
the company is treated as having subscribed for the bonus shares on that date.
(1) This section applies if—
(a) a company disposes of shares (“the new shares”), and
(b) the new shares are, by virtue of section 127 of TCGA 1992 (reorganisation etc treated as not involving disposal), identified with other shares (“the old shares”) previously held by the company.
(2) The company is not eligible for share loss relief on the disposal of the new shares unless condition A or B is met.
This is subject to section 87(3).
(3) Condition A is that the company would have been eligible for share loss relief on a disposal of the old shares—
(a) if the company had incurred an allowable loss in disposing of them by way of a bargain made at arm's length on the occasion of the disposal that would have occurred but for section 127 of TCGA 1992, and
(b) where applicable, if this Chapter had then been in force.
(4) Condition B is that the company gave for the new shares consideration in money or money's worth other than consideration of the kind mentioned in paragraph (a) or (b) of section 128(2) of TCGA 1992 (“new consideration”).
(5) If the company relies on condition B, the amount of share loss relief on the disposal of the new shares must not exceed the amount or value of the new consideration taken into account as a deduction in calculating the amount of the loss incurred on the disposal.
(1) Subsection (2) applies if—
(a) a company disposes of any shares for which it has subscribed in a qualifying trading company (“qualifying shares”),
(b) those shares either—
(i) form part of a section 104 holding or a 1982 holding at the time of the disposal, or
(ii) formed part of such a holding at an earlier time, and
(c) the company makes a claim under section 70 in respect of a loss incurred on the disposal.
(2) The amount of share loss relief on the disposal is not to exceed the sums that would be allowed as deductions in calculating the amount of the loss if the qualifying shares had not formed part of the holding.
(3) Subsection (4) applies if—
(a) a company disposes of any qualifying shares,
(b) the qualifying shares, and other shares that are not capable of being qualifying shares, are for the purposes of TCGA 1992 to be treated as acquired by a single transaction by virtue of section 105(1)(a) of that Act (disposal of shares acquired on same day etc), and
(c) the company makes a claim under section 70 in respect of a loss incurred on the disposal.
(4) The amount of share loss relief on the disposal is not to exceed the sums that would be allowed as deductions in calculating the amount of the loss if—
(a) the qualifying shares were to be treated as acquired by a single transaction, and
(b) the other shares were not to be so treated.
(5) Subsection (6) applies if—
(a) a company (“the investor”) disposes of any qualifying shares,
(b) the qualifying shares (taken as a single asset), and other shares in the same company that are not capable of being qualifying shares (taken as a single asset), are for the purposes of TCGA 1992 to be treated as the same asset by virtue of section 127 of that Act (reorganisation etc treated as not involving disposal), and
(c) the investor makes a claim under section 70 in respect of a loss incurred on the disposal.
References in this subsection and subsection (6) to other shares in the same company include debentures of the same company.
(6) The amount of share loss relief on the disposal is not to exceed the sums that would be allowed as deductions in calculating the amount of the loss if the qualifying shares and the other shares in the same company were not to be treated as the same asset.
(7) In this section—
“section 104 holding” has the meaning given by section 104(3) of TCGA 1992, and
“1982 holding” has the meaning given by section 109(1) of that Act.
(8) For the purposes of this section and section 76, shares are not capable of being qualifying shares at any time if—
(a) the company concerned acquired the shares otherwise than by subscription, or
(b) condition C in section 78(4) was not met in relation to the issue of the shares, ...
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9) For the purposes of subsection (5), shares are not capable of being qualifying shares at any time if they are shares of a different class from the shares mentioned in paragraph (a) of that subsection.
76 Disposal of shares forming part of mixed holding
(1) This section applies if a company disposes of shares forming part of a mixed holding of shares, that is, a holding of shares in a company which includes—
(a) shares that are not capable of being qualifying shares, and
(b) other shares.
(2) Any question—
(a) whether a disposal by the company of shares forming part of the mixed holding is of qualifying shares, or
(b) as to which of any qualifying shares acquired by the company at different times such a disposal relates to,
is to be determined as provided by the following provisions of this section.
(3) Any such question as is mentioned in subsection (2) is to be determined—
(a) except in a case falling within paragraph (b)—
(i) in accordance with subsection (4), and
(ii) in the case of shares which under that subsection are identified with the whole or any part of a section 104 holding or a 1982 holding, in accordance with subsection (5),
(b) in the case of a mixed holding which includes any shares—
(i) to which investment relief is attributable under Schedule 15 to FA 2000 (corporate venturing scheme), and
(ii) which have been held continuously (within the meaning of paragraph 97 of that Schedule) from the time they were issued until the disposal,
in accordance with subsection (6).
(4) For the purposes of subsection (3)(a)(i), the question is to be determined by identifying the shares disposed of in accordance with sections 105 and 107 of TCGA 1992.
(5) For the purposes of subsection (3)(a)(ii), the question is to be determined by treating the disposal and any previous disposal by the company out of the section 104 or 1982 holding as relating to shares acquired later rather than earlier.
(6) For the purposes of subsection (3)(b), the question is to be determined—
(a) as provided by paragraph 93 of Schedule 15 to FA 2000 (identification of shares on a disposal of part of a holding where investment relief is attributable to any shares in the holding held continuously by the disposing company), but
(b) as if the references in that paragraph to a disposal had the same meaning as in the preceding provisions of this section.
(7) Any such question as is mentioned in subsection (2) which cannot be determined as provided by subsections (3) to (6) is to be determined on a just and reasonable basis.
(8) In this section “holding” means any number of shares of the same class held by one company in the same capacity, growing or diminishing as shares of that class are acquired or disposed of.
For this purpose shares are not to be treated as being of the same class unless they are so treated by the practice of a recognised stock exchange or would be so treated if dealt in on such an exchange.
(9) In this section “section 104 holding”, “1982 holding” and “qualifying shares” have the same meaning as in section 75.
(1) In a case to which section 127 of TCGA 1992 (reorganisation etc treated as not involving disposal) applies (including a case where that section applies by virtue of an enactment relating to chargeable gains), shares included in the new holding are treated for the purposes of section 76 as acquired when the original shares were acquired.
(2) Any shares held or disposed of by a nominee or bare trustee for a company are treated for the purposes of section 76 as held or disposed of by that company.
(3) In this section “new holding” and “original shares” have the same meaning as in section 127 of TCGA 1992 (or, as the case may be, that section as applied by the enactment concerned).
(1) For the purposes of this Chapter a qualifying trading company is a company which meets each of conditions A to C .
(2) Condition A is that the company either—
(a) meets each of the following requirements on the date of the disposal—
(i) the trading requirement (see section 79),
(ii) the control and independence requirement (see section 81),
(iii) the qualifying subsidiaries requirement (see section 82), and
(iv) the property managing subsidiaries requirement (see section 83), or
(b) has ceased to meet any of those requirements at a time which is not more than 3 years before that date and has not since that time been an excluded company, an investment company or a trading company.
(3) Condition B is that the company either—
(a) has met each of the requirements mentioned in condition A for a continuous period of 6 years ending on that date or at that time, or
(b) has met each of those requirements for a shorter continuous period ending on that date or at that time and has not before the beginning of that period been an excluded company, an investment company or a trading company.
(4) Condition C is that the company—
(a) met the gross assets requirement (see section 84) both immediately before and immediately after the issue of the shares in respect of which the share loss relief is claimed, and
(b) met the unquoted status requirement (see section 85) at the relevant time within the meaning of that section.
(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) The trading requirement is that—
(a) the company, ignoring any incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, or
(b) the company is a parent company and the business of the group does not consist wholly or as to a substantial part in the carrying on of non-qualifying activities.
(2) If the company intends that one or more other companies should become its qualifying subsidiaries with a view to their carrying on one or more qualifying trades—
(a) the company is treated as a parent company for the purposes of subsection (1)(b), and
(b) the reference in subsection (1)(b) to the group includes the company and any existing or future company that will be its qualifying subsidiary after the intention in question is carried into effect.
This subsection does not apply at any time after the abandonment of that intention.
(3) For the purpose of subsection (1)(b) the business of the group means what would be the business of the group if the activities of the group companies taken together were regarded as one business.
(4) For the purpose of determining the business of a group, activities are ignored so far as they are activities carried on by a mainly trading subsidiary otherwise than for its main purpose.
(5) For the purposes of determining the business of a group, activities of a group company are ignored so far as they consist in—
(a) the holding of shares in or securities of a qualifying subsidiary of the parent company,
(b) the making of loans to another group company,
(c) the holding and managing of property used by a group company for the purpose of one or more qualifying trades carried on by a group company, or
(d) the holding and managing of property used by a group company for the purpose of research and development from which it is intended—
(i) that a qualifying trade to be carried on by a group company will be derived, or
(ii) that a qualifying trade carried on or to be carried on by a group company will benefit.
(6) Any reference in subsection (5)(d)(i) or (ii) to a group company includes a reference to any existing or future company which will be a group company at any future time.
(7) In this section—
“excluded activities” has the meaning given by section 192 of ITA 2007 read with sections 193 to 199 of that Act,
“group” means a parent company and its qualifying subsidiaries,
“group company”, in relation to a group, means the parent company or any of its qualifying subsidiaries,
“incidental purposes” means purposes having no significant effect (other than in relation to incidental matters) on the extent of the activities of the company in question,
“mainly trading subsidiary” means a subsidiary which, apart from incidental purposes, exists wholly for the purpose of carrying on one or more qualifying trades, and any reference to the main purpose of such a subsidiary is to be read accordingly,
“non-qualifying activities” means—
excluded activities, and
activities (other than research and development) carried on otherwise than in the course of a trade,
“parent company” means a company that has one or more qualifying subsidiaries,
“qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007,
“qualifying trade” has the meaning given by section 189 of that Act, and
“research and development” has the meaning given by section 1138 of this Act.
(8) In sections 189(1)(b) and 194(4)(c) of ITA 2007 (as applied by subsection (7) for the purposes of the definitions of “excluded activities” and “qualifying trade”) “period B” means the continuous period that is relevant for the purposes of section 78(3).
(9) In section 195 of ITA 2007 (as applied by subsection (7) for the purpose of the definition of “excluded activities”), references to the issuing company are to be read as references to the company mentioned in subsection (1).
80 Ceasing to meet trading requirement because of administration etc
(1) A company is not regarded as ceasing to meet the trading requirement merely because of anything done in consequence of the company or any of its subsidiaries being in administration or receivership.
This has effect subject to subsections (2) and (3).
(2) Subsection (1) applies only if—
(a) the entry into administration or receivership, and
(b) everything done as a result of the company concerned being in administration or receivership,
is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax.
(3) A company ceases to meet the trading requirement if before the time that is relevant for the purposes of section 78(2)—
(a) a resolution is passed, or an order is made, for the winding up of the company or any of its subsidiaries (or, in the case of a winding up otherwise than under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)), any other act is done for the like purpose), or
(b) the company or any of its subsidiaries is dissolved without winding up.
This is subject to subsection (4).
(4) Subsection (3) does not apply if —
(a) the winding up is for genuine commercial reasons, and is not part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax, and
(b) the company continues, during the winding up, to be a trading company.
(5) References in this section to a company being “in administration” or “in receivership” are to be read in accordance with section 252 of ITA 2007.
(1) The control element of the requirement is that—
(a) the company must not control (whether on its own or together with any person connected with it) any company which is not a qualifying subsidiary of the company, and
(b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 78(3) or otherwise).
(2) The independence element of the requirement is that—
(a) the company must not—
(i) be a 51% subsidiary of another company, or
(ii) be under the control of another company (or of another company and any other person connected with that other company), without being a 51% subsidiary of that other company, and
(b) no arrangements must be in existence by virtue of which the company could fail to meet paragraph (a) (whether at a time during the continuous period that is relevant for the purposes of section 78(3) or otherwise).
(3) This section is subject to section 87(3).
(4) In this section—
“arrangements” includes any scheme, agreement or understanding (whether or not legally enforceable),
“control”, in subsection (1)(a), is to be read in accordance with sections 450 and 451 (but see section 1124 for the meaning of “control” in subsection (2)(a)(ii)), and
“qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007.
(1) The qualifying subsidiaries requirement is that any subsidiary that the company has must be a qualifying subsidiary of the company.
(2) In this section “qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007.
(1) The property managing subsidiaries requirement is that any property managing subsidiary that the company has must be a qualifying 90% subsidiary of the company.
(2) In this section—
“property managing subsidiary” has the meaning given by section 188(2) of ITA 2007, and
“qualifying 90% subsidiary” has the meaning given by section 190 of that Act.
(1) The gross assets requirement in the case of a single company is that the value of the company's gross assets—
(a) must not exceed £7 million immediately before the shares in respect of which the share loss relief is claimed are issued, and
(b) must not exceed £8 million immediately afterwards.
(2) The gross assets requirement in the case of a parent company is that the value of the group assets—
(a) must not exceed £7 million immediately before the shares in respect of which the share loss relief is claimed are issued, and
(b) must not exceed £8 million immediately afterwards.
(3) The value of the group assets means the sum of the values of the gross assets of each of the members of the group, ignoring any that consist in rights against, or shares in or securities of, another member of the group.
(4) In this section—
“group” means a parent company and its qualifying subsidiaries,
“parent company” means a company that has one or more qualifying subsidiaries,
“qualifying subsidiary” is to be read in accordance with section 191 of ITA 2007, and
“single company” means a company that does not have one or more qualifying subsidiaries.
(1) The unquoted status requirement is that, at the time (“the relevant time”) at which the shares in respect of which the share loss relief is claimed are issued—
(a) the company must be an unquoted company,
(b) there must be no arrangements in existence for the company to cease to be an unquoted company, and
(c) there must be no arrangements in existence for the company to become a subsidiary of another company (“the new company”) by virtue of an exchange of shares, or shares and securities, if—
(i) section 87 applies in relation to the exchange, and
(ii) arrangements have been made with a view to the new company ceasing to be an unquoted company.
(2) The arrangements referred to in subsection (1)(b) and (c)(ii) do not include arrangements in consequence of which any shares, stocks, debentures or other securities of the company or the new company are at any subsequent time—
(a) listed on a stock exchange that is a recognised stock exchange by virtue of an order made under section 1005(1)(b) of ITA 2007, or
(b) listed on an exchange, or dealt in by any means, designated by an order made for the purposes of section 184(3)(b) or (c) of that Act,
if the order was made after the relevant time.
(3) In this section—
“arrangements” includes any scheme, agreement or understanding (whether or not legally enforceable),
“debenture” has the meaning given by section 738 of the Companies Act 2006, and
“unquoted company” has the meaning given by section 184(2) of ITA 2007.
87 Relief after an exchange of shares for shares in another company
(1) This section and section 88 apply in relation to shares if—
(a) a company (“the new company”) in which the only issued shares are subscriber shares acquires all the shares (“old shares”) in another company (“the old company”),
(b) the consideration for the old shares consists wholly of the issue of shares (“new shares”) in the new company,
(c) the consideration for the new shares of each description consists wholly of old shares of the corresponding description,
(d) new shares of each description are issued to the holders of old shares of the corresponding description in respect of and in proportion to their holdings, and
(e) by virtue of section 127 of TCGA 1992 as applied by section 135(3) of that Act (company reconstructions etc), the exchange of shares is not to be treated as involving a disposal of the old shares or an acquisition of the new shares.
In this subsection references to shares, except the first and that in the expression “subscriber shares”, include securities.
(2) For the purposes of this Chapter the exchange of shares is not regarded as involving any disposal of the old shares or any acquisition of the new shares.
(3) Nothing in—
(a) section 74(2) (disposal of new shares), and
(b) section 81 (the control and independence requirement),
applies in relation to such an exchange of shares, or shares and securities, as is mentioned in subsection (1) or, in the case of section 81, arrangements with a view to such an exchange.
(4) For the purposes of this section old shares and new shares are of a corresponding description if, on the assumption that they were shares in the same company, they would be of the same class and carry the same rights.
(5) References in section 88 to “old shares”, “new shares”, “the old company” and “the new company” are to be read in accordance with this section.
(1) Subsection (2) applies if, in the case of any new shares held by a company or by a nominee for a company, the old shares for which they were exchanged were shares which had been subscribed for by the company (“the investor”).
(2) This Chapter has effect in relation to any subsequent disposal or other event as if—
(a) the new shares had been subscribed for by the investor at the time when, and for the amount for which, the old shares were subscribed for by the investor,
(b) the new shares had been issued by the new company at the time when the old shares were issued to the investor by the old company, and
(c) any requirements of this Chapter which were met at any time before the exchange by the old company had been met at that time by the new company.
(3) Nothing in subsection (2) applies in relation to section 195(7) of ITA 2007 as applied by section 79(7) above for the purpose of the definition of “excluded activities”.
(1) This section applies for the purposes of the following provisions—
...
section 84(1)(a) and (2)(a),
section 85(1), and
section 88(2)(b).
(2) If—
(a) any shares (“the original shares”) have been issued to a company, or are treated under this subsection as having been issued to the company at a particular time, and
(b) any corresponding bonus shares are subsequently issued to the company,
the bonus shares are treated as having been issued at the time the original shares were issued to the company or are treated as having been so issued.
(1) In this Chapter (subject to subsections (2) to (7))—
“bonus shares” means shares which are issued otherwise than for payment (whether in cash or otherwise),
“corresponding bonus shares”, in relation to any shares, means bonus shares which—
are issued in respect of those shares, and
are in the same company, are of the same class, and carry the same rights, as those shares,
“excluded company” means a company which—
has a trade which consists wholly or mainly of dealing in land, in commodities or futures or in shares, securities or other financial instruments,
has a trade which is not carried on on a commercial basis and in such a way that profits in the trade can reasonably be expected to be realised,
is a holding company of a group other than a trading group, or
is a building society or a registered society ,
“group” (except in sections 79 and 84) means a company which has one or more 51% subsidiaries together with that or those subsidiaries,
“holding company” means a company whose business consists wholly or mainly in the holding of shares or securities of companies which are its 51% subsidiaries,
“investment company” means a company—
whose business consists wholly or mainly in the making of investments, and
which derives the principal part of its income from the making of investments,
but does not include the holding company of a trading group,
“registered society” means—
a registered society within the meaning of the Co-operative and Community Benefit Societies Act 2014,
a society registered or treated as registered under the Industrial and Provident Societies Act (Northern Ireland) 1969, or
an SCE formed in accordance with Council Regulation ( EC ) No 1435/2003 on the Statute for a European Cooperative Society,
“shares”—
includes stock, but
does not include shares or stock not forming part of a company's ordinary share capital,
“share loss relief” has the meaning given by section 68(1),
“trading company” means a company other than an excluded company which is—
a company whose business consists wholly or mainly in the carrying on of a trade or trades, or
the holding company of a trading group, and
“trading group” means a group the business of whose members, when taken together, consists wholly or mainly in the carrying on of a trade or trades.
(2) For the purposes of the definition of “corresponding bonus shares” in subsection (1), shares are not treated as being of the same class unless they would be so treated if they were—
(a) included in the official UK list, and
(b) admitted to trading on the London Stock Exchange.
(3) Except as provided by subsection (4), paragraph (b) of the definition of shares in subsection (1) does not apply in the definition of “excluded company” in subsection (1) or in sections 75(3) to (6), (8) and (9) and 87(1) to (4).
(4) Paragraph (b) of that definition applies in relation to the first reference to “shares” in section 87(1).
(5) The definition of “shares” in subsection (1) does not apply in sections 79(5)(a), 84(3) and 85(1)(c) and (2).
(6) For the purposes of the definition of “trading group” in subsection (1), any trade carried on by a subsidiary which is an excluded company is treated as not constituting a trade.
(7) For the purposes of this Chapter a disposal of shares which results in an allowable loss for the purposes of corporation tax on chargeable gains is treated as made at the time when the disposal is made or treated as made for the purposes of TCGA 1992.
91 Relief for losses from miscellaneous transactions
(1) This section applies if, in an accounting period (“the loss-making period”), a company makes a loss in a transaction within subsection (2).
(2) A transaction is within this subsection if income arising from it would be miscellaneous income of the company.
(3) Relief for the loss is given to the company under this section.
(4) For this purpose the company's miscellaneous income of the loss-making period is reduced by the loss.
(5) Subsection (6) applies to the loss so far as it cannot be used under subsection (4) to reduce the company's income.
(6) The loss—
(a) is carried forward to subsequent accounting periods, and
(b) the company's miscellaneous income of any such period is reduced by the loss so far as it cannot be used under this paragraph to reduce the income of an earlier period.
(7) A company's miscellaneous income is so much of the company's income which—
(a) arises from transactions, and
(b) is chargeable to corporation tax under or by virtue of any provision to which section 1173 applies, other than regulation 18(4) of the Offshore Funds (Tax) Regulations 2009 (S.I. 2009/3001) (offshore income gains).
92 Loss relief to be reduced if government investment is written off
(1) This section applies if an amount of government investment in a company (“the written-off amount”) is written off.
(2) The written-off amount is set off against the company's carry-forward losses as at the end of the accounting period ending last before the day of the write-off.
(3) If the written-off amount exceeds those losses, the excess is set off against the company's carry-forward losses as at the end of the next accounting period and so on until the whole of the written-off amount has been set off.
(4) In this Chapter “company” has the meaning given by section 1121 but does not include an unincorporated association.
(5) This section needs to be read with—
section 93 (which applies if the company is in a group of companies),
section 94 (which explains what is meant by government investment being written off and how the written-off amount is calculated), and
section 95 (which explains what is meant by carry-forward losses).
(1) This section applies if—
(a) at the end of an accounting period a company in which an amount of government investment is written off is in a group of companies, and
(b) under section 92(2) or (3) an amount could be set off against the company's carry-forward losses as at the end of that period (or could be so set off if there were enough of those losses).
(2) The amount may be set off (wholly or partly) against the carry-forward losses of one or more companies within subsection (3), as may be just and reasonable.
(3) A company (other than the company referred to in subsection (1)(a)) is within this subsection if at the end of the accounting period it is in the group of companies.
(4) A “group of companies” consists of a company that has one or more 51% subsidiaries, together with that or those subsidiaries.
94 Cases in which government investment is written off
(1) Government investment in a company is written off if any of the following occurs in relation to the company. This is subject to subsection (2).
Case 1
The company's liability to repay any money lent to it out of public funds by a Minister is extinguished. In this case the written-off amount is the amount of the liability extinguished and the write-off occurs when the liability is extinguished.
Case 2
Any of the company's shares for which a Minister has subscribed out of public funds are cancelled. In this case the written-off amount is the amount subscribed for the shares and the write-off occurs when the shares are cancelled.
Case 3
The company's commencing capital debt (see subsection (3)) is reduced otherwise than by being paid off or its public dividend capital (see subsection (4)) is reduced otherwise than by being repaid (including, in either case, a reduction to nil). In this case the written-off amount is the amount of the reduction and the write-off occurs when the reduction occurs.
(2) The written-off amount is reduced so far as it is replaced by—
(a) money lent, or a payment made, out of public funds, or
(b) shares subscribed for by a Minister for money or money's worth.
(3) “Commencing capital debt” means a debt to a Minister assumed as such under an enactment.
(4) “Public dividend capital” means an amount paid by a Minister—
(a) under an enactment in which that amount is so described, or
(b) under an enactment corresponding to an enactment in which a payment made on similar terms to another body is so described.
(5) In this section—
“enactment” includes an Act of the Scottish Parliament, and
“Minister” means a Minister of the Crown, the Scottish Ministers or a Northern Ireland department.
(1) A company's carry-forward losses as at the end of an accounting period are as follows.
Type 1
Losses of the company to be carried forward under section 45, 45A, 45B, 62 or 66 to the next accounting period. These include losses to be treated as expenses of management of the company under section 63 for the next accounting period.
Type 2
Any excess of the company to be carried forward for deduction to the next accounting period under section 1223(3) of CTA 2009.
Type 3
Any excess of the company to be carried forward for deduction to the next accounting period under section 260(2) of CAA 2001.
Type 4
Any qualifying charitable donations made by the company so far as they exceed the company's profits of the accounting period and are available for surrender for the next accounting period under Part 5 (group relief).
Type 5
Allowable losses of the company available under section 8 of TCGA 1992 so far as not allowed for the accounting period or any previous accounting period.
(2) For the purposes of section 92(2) an amount is excluded from a company's carry-forward losses if, before the day of the write-off, a claim is made in relation to the amount under section 37 or Part 5 (group relief) or Part 5A (group relief for carried forward losses) of this Act or section 260(3) of CAA 2001.
(3) But, for the purposes of section 92(3), any such claim made on or after that day is to be disregarded in determining the company's carry-forward losses as at the end of any accounting period.
(4) The set off of an amount against a company's carry-forward losses as at the end of any accounting period is to be done—
first, against those within Types 1 to 4, and
second, against those within Type 5.
(1) A company, in calculating its profits of a trade for corporation tax purposes, is not prevented from deducting a sum by reason only that an amount of government investment in the company is written off.
(2) Subsection (3) applies for the purposes of section 50 of TCGA 1992 and section 532 of CAA 2001 in their application in relation to a company.
(3) Expenditure is not met by a public body (as defined in section 532(2) of CAA 2001) by reason only that an amount of government investment in the company is written off.
(4) Section 464(1) of CTA 2009 does not prevent section 92 of this Act from applying if the writing-off of an amount of government investment in a company involves the extinguishment (in whole or in part) of a liability under a loan relationship.
(1) This Part—
(a) allows a company to surrender losses and other amounts, and
(b) enables, in certain cases involving groups or consortiums of companies, other companies to claim corporation tax relief for the losses and other amounts that are surrendered.
(2) The corporation tax relief mentioned in subsection (1) is called “group relief”.
(3) Chapter 2 allows a company within the charge to corporation tax to surrender losses and other amounts it has for an accounting period.
(4) Chapter 3 allows a non-UK resident company that is resident or carrying on a trade in the European Economic Area to surrender losses and other amounts it has for a period.
(5) Chapter 4 sets out how a company may claim group relief in respect of losses and other amounts surrendered, how group relief is given and limitations on the amount of group relief to be given on a claim.
(6) Chapter 5 explains certain key concepts for the purposes of group relief, including (in particular) how to determine if a company is a member of a group of companies or is a member of, or is owned by, a consortium.
(7) Chapter 6 contains provision about persons holding equity in companies and about distributions of companies' profits and assets (which is relevant for the purposes of sections 143(3)(b) and (c) and 144(3)(b) and (c) (in Chapter 4) and section 151(4)(a) and (b) (in Chapter 5)).
(8) Chapter 7 contains definitions that apply for the purposes of this Part and miscellaneous provisions.
(9) For provision about making claims for group relief, see Part 8 of Schedule 18 to FA 1998 (which includes provision in paragraph 76 of that Schedule for the making of assessments or other adjustments if group relief has been given which is, or has become, excessive).
(1) This Chapter allows a company to surrender losses and other amounts it has for an accounting period.
(2) Sections 99 to 104 set out the basic provisions about the surrendering of losses and other amounts.
(3) Sections 105 to 110 place restrictions on the surrendering of losses and other amounts.
(1) This section applies if a company has one or more of the following for an accounting period—
(a) a trading loss (see section 100),
(b) a capital allowance excess (see section 101),
(c) a deficit within Chapter 16 or 16A of Part 5 of CTA 2009 (non-trading deficit on loan relationship),
(d) amounts allowable as qualifying charitable donations (see Part 6),
(da) amounts allowable as qualifying expenditure on grassroots sport (see Part 6A),
(e) a UK property business loss (see section 102),
(f) management expenses (see section 103), and
(g) a non-trading loss on intangible fixed assets (see section 104).
(2) The company may surrender the losses and other amounts under this Chapter so far as the losses and other amounts are eligible for corporation tax relief (apart from this Part).
(3) Subsection (2) applies in relation to losses and other amounts within subsection (1)(a) to (c) even if the company has other profits in the accounting period mentioned in subsection (1) from which the losses and other amounts could be deducted.
(4) But so far as losses and other amounts are within subsection (1)(d) to (g), subsection (2) is subject to the restriction in section 105.
(5) Subsection (2) is also subject to—
(a) sections 106 to 110 (which place further restrictions on what the surrendering company may surrender),
(b) sections 432 and 433 (which restrict relief for expenses treated as incurred under Chapter 3 or 4 of Part 9), and
(c) sections 887 and 888 (which restrict relief in certain cases involving partnership losses in a business of leasing plant or machinery).
(6) Under paragraph 70(1) of Schedule 18 to FA 1998, the company surrenders losses or other amounts, so far as eligible for surrender under this Chapter, by consenting to one or more claims for group relief in relation to the amounts (see Requirement 1 in section 130).
(7) In this Part, in relation to losses or other amounts within subsection (1) that a company has for an accounting period—
“the surrenderable amounts” means the losses or other amounts so far as eligible for surrender under this Chapter,
“surrendering company” means the company that has the losses or other amounts, and
“the surrender period” means the accounting period for which the company has the losses or other amounts.
(1) In section 99(1)(a) “trading loss” means a loss made in a trade in the surrender period.
(2) But it does not include—
(a) a loss made in a trade carried on wholly outside the United Kingdom, or
(b) a loss that is not eligible for relief under section 37 as a result of section 44 or 48.
(1) In section 99(1)(b) “capital allowance excess” means an excess of the kind mentioned in section 260(1) of CAA 2001 for the surrender period.
(2) In determining if there is such an excess for the surrender period and, if there is, its amount, apply section 260(1) of CAA 2001 but subject to subsections (3) and (4).
(3) Capital allowances brought forward from previous accounting periods are to be ignored.
(4) The reference in section 260(1) of CAA 2001 to a description of the company's income is to be read as a reference to that description of income before deductions for—
(a) losses of any accounting period other than the surrender period, or
(b) capital allowances.
(1) In section 99(1)(e) “UK property business loss” means a loss made in a UK property business in the surrender period.
(2) But it does not include a loss treated as made in the surrender period as a result of section 62(5).
(1) In section 99(1)(f) “management expenses” means expenses that are deductible for the surrender period under section 1219 of CTA 2009.
(2) But it does not include—
(a) expenses that are deductible for the surrender period as a result of section 1223 of CTA 2009, or
(b) amounts treated as expenses deductible for the surrender period as a result of section 63 above.
104 Meaning of “non-trading loss on intangible fixed assets”
(1) In section 99(1)(g) “non-trading loss on intangible fixed assets” is to be read in accordance with Part 8 of CTA 2009.
(2) But it does not include a loss treated as a non-trading loss on intangible fixed assets for the surrender period as a result of section 753(3) of CTA 2009.
105 Restriction on surrender of losses etc within section 99(1)(d) to (g)
(1) This section applies if the surrendering company has for the surrender period losses or other amounts within section 99(1)(d) to (g) (“relevant amounts”) that are eligible for corporation tax relief (apart from this Part).
(2) The surrendering company may not surrender any relevant amount under this Chapter unless the total of the relevant amounts exceeds the profit-related threshold .
(3) If the total of the relevant amounts does exceed the profit-related threshold—
(a) the surrendering company may surrender relevant amounts, but
(b) the total amount that may be surrendered is limited to the amount of the excess.
(3A) The profit-related threshold” is the sum of—
(a) the surrendering company's gross profits of the surrender period, and
(b) where chargeable profits of a CFC for an accounting period ending in the surrender period are apportioned to the surrendering company in accordance with step 3 in subsection (1) of 371BC of TIOPA 2010 and the surrendering company is in relation to that accounting period of the CFC a chargeable company for the purposes of step 4 in that subsection, the total of the chargeable profits so apportioned.
(3B) Where—
(a) an accounting period of a CFC ending in the surrender period is one to which (because of paragraph 50 of Schedule 20 of FA 2012) the repeal of Chapter 4 of Part 17 of ICTA does not apply,
(b) chargeable profits of the CFC for that accounting period are apportioned to the surrendering company in accordance with sections 747(3) and 752 of ICTA, and
(c) the surrendering company is not prevented by section 747(5) of ICTA from being chargeable to tax in respect of the CFC for that accounting period,
the profit-related threshold also includes the total of the chargeable profits so apportioned.
(4) If the surrendering company surrenders relevant amounts, the amount surrendered is treated as consisting of—
(a) first, donations within section 99(1)(d),
(aa) second, expenditure within section 99(1)(da),
(b) third, losses within section 99(1)(e),
(c) fourth, expenses within section 99(1)(f), and
(d) fifth, losses within section 99(1)(g).
(5) For the purposes of this section the surrendering company's gross profits of the surrender period are its profits for that period without any of the following—
(a) a deduction in respect of any of the kinds of thing mentioned in section 99(1),
(b) a deduction falling to be made in respect of losses, allowances or other amounts of any other period (whether or not in respect of a kind of thing so mentioned), and
(c) a deduction falling to be made by virtue of section 63 of this Act or section 1223(3) of CTA 2009 (other amounts carried forward).
(5A) For the purposes of this section—
“CFC” has the same meaning as in Part 9A of TIOPA 2010, except that in subsection (3B) it means a controlled foreign company as defined by section 747(2) of ICTA;
“chargeable profits”, in relation to a CFC, is to be read in accordance with section 371BA(3) of TIOPA 2010, except that in subsection (3B) it is to be read in accordance with section 747(6) of ICTA.
(6) This section is subject to section 305 (oil activities: availability of group relief against ring fence profits).
106 Restriction on losses etc surrenderable by UK resident
(1) This section applies if the surrendering company is UK resident.
(2) The surrendering company may not surrender a loss or other amount under this Chapter so far as the loss or other amount—
(a) is attributable to a permanent establishment through which the company carries on a trade outside the United Kingdom (see subsection (3)), and
(b) is, or represents, an amount within subsection (5).
(3) A loss or other amount is attributable to a permanent establishment of the surrendering company if (ignoring this section) the amount could be included in the company's surrenderable amounts for the surrender period if those amounts were determined—
(a) by reference to that establishment alone, and
(b) by applying, in relation to that establishment, principles corresponding in all material respects to those mentioned in subsection (4).
(4) The principles are those that would be applied for corporation tax purposes in determining an equivalent loss or other amount in the case of a permanent establishment through which a non-UK resident company carries on a trade in the United Kingdom.
(5) An amount is within this subsection if, for the purposes of non-UK tax (see section 187) chargeable under the law of the territory in which the permanent establishment is situated, the amount is (in any period) deductible from or otherwise allowable against non-UK profits (see section 108) of a person other than the surrendering company.
(6) Subsection (7) applies for the purposes of subsection (5) if, in order to determine if an amount is deductible or otherwise allowable for the purposes of non-UK tax chargeable under the law of a territory, it is necessary under that law to know if the amount (or a corresponding amount) is deductible or otherwise allowable for tax purposes in the United Kingdom.
(7) The amount is to be treated as deductible or otherwise allowable for the purposes of the non-UK tax chargeable under the law of the territory concerned if (and only if) the surrendering company is treated as resident in that territory for the purposes of the non-UK tax.
107 Restriction on losses etc surrenderable by non-UK resident
(1) This section applies if the surrendering company is a non-UK resident company within the charge to corporation tax.
(1A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) ... The surrendering company may surrender a loss or other amount under this Chapter only so far as conditions A, B and C are met in relation to the loss or other amount.
(3) Condition A is that the loss or other amount is attributable to activities of the surrendering company in respect of which it is within the charge to corporation tax for the surrender period.
(4) Condition B is that the loss or other amount is not attributable to activities of the surrendering company that are double taxation exempt for the surrender period (see section 186).
(5) Condition C is that—
(a) the loss or other amount does not correspond to, and is not represented in, an amount within subsection (6), and
(b) no amount brought into account in calculating the loss or other amount corresponds to, or is represented in, an amount within subsection (6).
(6) An amount is within this subsection if, for the purposes of non-UK tax chargeable under the law of a territory, the amount is (in any period) deductible from or otherwise allowable against non-UK profits of any person.
(6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(6B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7) But an amount is not to be taken to be within subsection (6) ... by reason only that it is—
(a) an amount of profits brought into account for the purpose of being excluded from non-UK profits of the person, or
(b) an amount brought into account in calculating an amount of profits brought into account as mentioned in paragraph (a).
(8) Subsection (9) applies for the purposes of subsection (6) if, in order to determine if an amount is deductible or otherwise allowable for the purposes of non-UK tax chargeable under the law of a territory, it is necessary under that law to know if the amount (or a corresponding amount) is deductible or otherwise allowable for tax purposes in the United Kingdom.
(9) The amount is to be treated as deductible or otherwise allowable for the purposes of the non-UK tax chargeable under the law of the territory concerned.
(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) In sections 106 and 107 “non-UK profits”, in relation to a person, means—
(a) amounts within subsection (2), or
(b) amounts taken into account in calculating amounts within subsection (2).
(2) Amounts are within this subsection if they—
(a) are taken for the purposes of the non-UK tax in question to be the amount of the profits, income or gains on which (after allowing for deductions) the person is charged with that tax, and
(b) are not amounts corresponding to, and are not represented in, the total profits of any person of any accounting period.
(3) For the purposes of subsection (2)(b) amounts that arise from activities of a non-UK resident company that are double taxation exempt for an accounting period (see section 186) are excluded from the company's total profits of that period.
109 Restriction on losses etc surrenderable by dual resident
(1) This section applies if in the surrender period the surrendering company is UK resident and is also within a charge to non-UK tax under the law of a territory because—
(a) it derives its status as a company from that law,
(b) its place of management is in that territory, or
(c) it is for some other reason treated under that law as resident in that territory for the purposes of that tax.
(2) If condition A, B or C is met, the surrendering company may not surrender any losses or other amounts under this Chapter.
(3) Condition A is that the surrendering company is not a trading company throughout the surrender period.
(4) Condition B is that in the surrender period the surrendering company carries on a trade of such a description that the company's main function, or one of its main functions, consists of one or more of the following activities.
Activity 1
Acquiring and holding shares, securities or investments of any other kind (whether directly or indirectly).
Activity 2
Making, under loan relationships, payments in relation to which debits fall to be brought into account for the purposes of Part 5 of CTA 2009.
Activity 3
Making payments which are qualifying charitable donations.
Activity 4
Making payments similar to those within Activity 3 but which are deductible in calculating the profits of the surrendering company for corporation tax purposes.
Activity 5
Obtaining funds for the purposes of, or otherwise in connection with, any of Activities 1 to 4.
(5) Condition C is that in the surrender period the surrendering company carries on one or more of Activities 1 to 5—
(a) to an extent that does not appear to be justified by any trade which it carries on, or
(b) for a purpose that does not appear to be appropriate to any such trade.