BKM306850 - Bank loss restriction: carried forward reliefs outside the restriction: allowance for building societies - re-allocation of allowance within building society group

CTA10/S269CJ

There may be situations after the initial allocation where:

  • There are banking companies, including the building society, who have insufficient allowance to cover all of their losses
  • The amount the building society can allocate (or designate) from its initial allowance is not sufficient to make up the difference
  • There are unused amounts of allowance allocated to other banking companies in the group.

In these circumstances the building society may make a re-allocation to the banking companies in need of more allowance. The building society may also make a further allocation of its own initial allowance at the same time.

Only a building society may make a re-allocation.

The building society may re-allocate back to itself an amount of allowance previously allocated to one of its subsidiary companies. The building society may therefore have an amount of allowance from its initial allowance as well as an amount allocated to it.

Where an amount of allowance is re-allocated away from a banking company, it is no longer available to that company.

Where an amount has been allocated to a banking company and that banking company has since left the building society’s group, that allowance is no longer available for re-allocation. Only the amounts of allowance in companies within the building society’s group at the point of re-allocation can be re-allocated.

The re-allocation must be supported by the submission of a revised statement of allocation to HM Revenue & Customs by the building society. The revised statement must include:

  • The total amount of unused carried-forward loss allowance amongst the banking companies in the group immediately before the re-allocation
  • The companies which had an amount of carried-forward loss allowance immediately before the re-allocation and the amounts of the allowance in each company
  • The companies which have an amount of carried-forward loss allowance immediately after the re-allocation and the amounts of the allowance in each company.

The amounts for the statement will be the amount of allowance each banking company has (including, for the building society, both the initial allowance and any amount previously re-allocated to it) which has not been used already through designation. Essentially the remaining balance of the allowance across the group.

The statement must be submitted to HM Revenue & Customs:

  • At or after the point the re-allocation is made
  • At or before the submission of the first tax return or amendment to a tax return in which any company in the group next makes a designation
  • An officer of Revenue & Customs may accept a later statement of allocation as valid. This will be in accordance with the principles of SP5/01 (CTM97065).

The re-allocation will replace previous allocations, and will remain effective until any further re-allocation is made.

The allowance is not tied to an accounting period until designated. If a company received a re-allocation of allowance after the end of a given accounting period but was still in time to submit or amend its tax return for that accounting period it could still claim the allowance for that period. Amendment includes amendment of a return at the conclusion of an enquiry.

This allowance for building societies is entirely separate from the deductions allowance used in calculating the general loss restriction (see BKM305500).