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HMRC internal manual

Company Taxation Manual

Corporation Tax: loss buying: restriction of group relief for carried-forward losses: consortia

CTA10/S676CC-CD

S676CC-CD are concerned with situations where there has been a change in company ownership and, immediately before that change, the transferred company was owned by a consortium.

Prior to the change in ownership, the transferred company, C, and another company, X, may have met one of the consortium conditions. As a result, they may have been able to surrender or claim losses to or from another for group relief for carried-forward losses (CTA10/PART5A).

In some circumstances, the change in ownership may effectively sever the relationship between the company and the consortium for the purposes of Part 5A. Once its ownership has changed, C may no longer be in a position where it might potentially surrender or claim losses to or from company X or any other company with which it previously met one of the consortium conditions. In these circumstances, s676CC-CD have no application.

However, this will not always be the case. For example, companies C and X may meet a consortium condition before the change and the group relief group condition (CTA10/S188CE, S188FB, CTA10/PART5/CH5), after the change in ownership.

If

· immediately before the change in ownership, companies C and X meet one of the consortium conditions, and

· following the change in ownership, companies C and X are still in a position where one might potentially surrender or claim losses to or from the other under Part 5A,

then s676CC-CD control the reliefs available.

In these circumstances,

· S676CC concerns the amount of relief the transferred company is able to claim, and

· S676CD concerns the amount of relief the transferred company is able to surrender.

Only the reliefs restricted more generally by Chapter 2C are affected.

Broadly, these are reliefs for losses incurred before the change in ownership and carried forward under one of a number of provisions (CTA10/S676CH).

Losses incurred after the change in ownership are not restricted by either of s676CC-CD.