BKM308100 - Bank loss restriction: effect on CFC charge: no use of relevant carried-forward reliefs against CFC charge

TIOPA10/S371UD(9)

Under the controlled foreign company rules in TIOPA10/Part 9A, the UK chargeable company (TIOPA10/S371BD) can claim its own relief against the CFC charge under TIOPA10/S371UD. This operates by allowing the UK chargeable company to make a claim under S371UD to relief to which it would be normally be entitled (which would either be by, or without, a claim under another section).

S371UD does not allow a chargeable company to claim relief for carried-forward trading losses. A banking company that is a chargeable company cannot claim relief for any of the other relevant carried-forward losses either. This means that relief is not available under S371UD(7)(b)(iii) or (vii) for:

• Any expenses of management which are pre-2015 carried-forward management expenses
• Any non-trading deficit which is a pre-2015 carried-forward non-trading deficit.

For guidance on what constitutes a pre-2015 management expense or non-trading deficit see BKM303150.

Commencement

This rule applies for S371UD claims against a controlled foreign company’s profits in its accounting periods commencing on or after 1 April 2015 (F(No 2)A15/Schedule 2/paragraph 8). Where the controlled foreign company’s accounting period straddles 1 April 2015 the split period commencement rules apply as explained in BKM309100.