Corporation Tax: changes to simplified arrangements for group relief
Published 17 January 2018
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Corporation Tax: simplified arrangements for group relief for carried-forward losses
Who is likely to be affected
Companies in groups that have carried-forward losses available for surrender as group relief.
General description of the measure
For losses incurred on or after 1 April 2017, groups will be able to claim group relief for carried-forward losses by nominating a company to submit joint amended returns on behalf of other group members. These are known as ‘simplified arrangements’.
Policy objective
This measure will reduce the administrative burden on companies by eliminating the requirement to file separate returns for each company and will mirror the existing process for claiming group relief for in-year losses. It will have no effect on the amount of losses that can be claimed.
This will be of particular benefit for groups that consist of a large number of companies and which have multiple group relief allocations that may be subject to numerous changes before being finalised.
Background to the measure
The consultation on the draft legislation and draft explanatory memorandum for this measure was published on 16 October 2017.
Detailed proposal
Operative date
The measure will have effect for losses incurred on or after 1 April 2017 and only applies to applications to use simplified arrangements for group relief for carried-forward losses made after the date the Statutory Instrument comes into force.
Current law
The current law can be found in the Corporation Tax (Simplified Arrangements for Group Relief) Regulations 1999 (SI 1999/2975).
Proposed revisions
The current law will be amended by the Corporation Tax (Simplified Arrangements for Group Relief) (Amendment) Regulations 2018. Section 18 and Schedule 4 of the Finance (No 2) Act 2017 introduced legislation that reforms the use of carried-forward losses enabling companies to surrender such losses between group companies.
Simplified arrangements for group relief for in-year losses exist to allow an authorised company to act on behalf of authorising companies within a group to make group relief claims and surrenders. The authorised company submits a written statement consolidating the group relief claims and surrenders information required to amend the relevant company tax returns.
The amendments to the Corporation Tax (Simplified Arrangements for Group Relief) Regulations 1999 extend the current simplified arrangements for group relief to incorporate carried-forward losses.
Summary of impacts
| Exchequer impact (£m) |
|||||
|---|---|---|---|---|---|
| 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 | 2021 to 2022 | 2022 to 2023 |
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure will have no impact on individuals or households as it only affects companies claiming group relief for carried-forward losses.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that this measure will impact any groups sharing protected characteristics.
Impact on business including civil society organisations
As published in the TIIN at Autumn Statement 2016, the expected one-off costs of the loss reform measure as a whole are c£20 to 25 million. The ongoing costs are expected to be c£3 to 5 million. Enabling companies to enter into simplified arrangements was taken into account when the administrative cost of the loss reform was calculated so introducing these regulations is expected to have no additional impact on businesses admin burdens and costs. However, if these Regulations are not introduced, there could be an additional admin burden cost to businesses as groups would not able to enter into simplified arrangements for claims of group relief for carried-forward losses. There is no impact on civil society organisations.
Operational impact (£m) (HMRC or other)
No IT or other changes are needed as a result of the consultation or the Regulations. Therefore the operational impact is nil.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through communication with affected taxpayer groups.
Further advice
If you have any questions about this change, please contact Eva Upali on Telephone: 03000 542 465 or email: eva.upali@hmrc.gsi.gov.uk.
Declaration
Mel Stride MP, Financial Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.