Corporation tax: restriction on relief for carried-forward losses: interaction with other reliefs
Non-trading loan relationship deficits carried back from later periods
Unlike carried-back trading losses or excess capital allowances, carried-back non-trading loan relationship deficits (NTLRDs) can only be set against non-trading profits chargeable under CTA09/PART5 (CFM32070, CTA09/S463, S463F).
When a company calculates the loss restriction, if its restricted losses include streamed losses (CTM05020), it will need to allocate in-year reliefs against its trading and non-trading profits (CTA10/S269ZF(3) Step 4) (CTM05060).
The way in which the company allocates in-year reliefs applies for the purposes of calculating the company’s qualifying profits (CTM05070), as part of the larger calculation of the restriction on relief for carried-forward losses. The allocation of in-year reliefs for the purposes of this calculation does not prejudice the manner in which the company may choose to set the relief when looking at the amount of CTA09/PART5 profits available for relief under CTA09/S459(1)(b) or S463B(1)(b).
Amount surrenderable as in-year group relief under CTA10/PART5
A company can only surrender certain relevant amounts to the extent that they exceed the company’s profit-related threshold (CTA10/S105; CTM80142). The profit-related threshold is calculated without taking account of reliefs of other periods, including reliefs brought forward and treated as being of the current period (such as losses of a UK property business brought forward under CTA10/S62). The loss restriction has no effect on the surrender of relevant amounts.
Double taxation relief
In most cases it is left to the company to organise the way deductions are allocated to best effect in terms of double tax relief (INTM167090). This is still true where companies are subject to the loss restriction. The general principles are set out at BKM304600.