CTM80435 - Groups: group relief: example - surrender of trading losses
Company D and Company E both have accounting periods of 12 months to 31 December 2011. Company D is a 75% subsidiary of Company E for all of that period.
The accounts and computations of the companies for the 12 months to 31 December 2011 show the following.
| Description | Amount |
|---|---|
| Company D | - |
| Trading profits | 拢3,000 |
| Less losses brought forward (CTA10/S45) | (拢1,500) |
| CT trading income | 拢1,500 |
| Income from special leasing | 拢500 |
| Capital allowances in respect of special leasing | (拢800) |
| Non-trading loan relationship deficit | (拢600) |
| Company E | - |
| Trading loss | (拢1,000) |
| Profits & gains from non-trading loan relationships | 拢300 |
Company E claims relief in respect of its trading loss under CTA10/S37.
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 (CTA10/S100).
The CT computations for the accounting period to 31 December 2011 are as follows.
| Description | Amount | Amount |
|---|---|---|
| Company D | - | - |
| Trading income | - | 拢1,500 |
| Special leasing income (拢500 less CAs 拢500) | - | Nil |
| Excess capital allowances | (拢300) | - |
| Non-trading loan relationship deficit | (拢600) | - |
| Group relief claimed | (拢600) | (拢1,500) |
| CT profits | - | Nil |
| Company E | - | - |
| Trading income | - | Nil |
| Profits & gains from non-trading loan relationships | - | 拢300 |
| Trading loss CTA10/S37 | - | (拢300) |
| CT Profits | - | Nil |
| Losses to carry forward | - | - |
| Trading loss | - | 拢1,000 |
| Less utilised CTA10/S37 | (拢300) | - |
| Surrendered via group relief | (拢600) | (拢900) |
| Loss to carry forward | - | 拢100 |
Company D may 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 拢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鈥檚 trading profits were 拢4,000 instead of 拢3,000, Company E could have decided not to claim relief for itself of 拢300 of the trading loss generated in that year under CTA10/S37, and it would then have been able to surrender the whole of its trading loss, 拢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).
It is important to remember that the surrendering company may choose to surrender its trading losses of the period in full (or in part) without off-set against its own profits, where conversely the claimant company must reduce its available total profits by any loss in trade in the same accounting period, regardless of whether it claims such an amount (CTM80400).