Residence: dual resident companies: anti-avoidance - limitation of group relief
Losses or other amounts are not available for set-off under the group relief provisions if the company that would be the surrendering company is a dual resident investing company. Group relief is denied in respect of amounts listed at CTA10/S99 (1), namely
- a trading loss
- a capital allowance excess
- a non trading loan relationships deficit
- amounts allowable as qualifying charitable donations
- a UK property business loss
- management expenses, and
- a non-trading loss on intangible fixed assets.
A, B and C are companies in a multinational group.
A is UK incorporated and UK resident.
B is a dual resident investing company and is US incorporated and UK resident.
C is US incorporated and US resident.
A and B are members of a UK sub-group.
B and C are members of a US sub-group.
A and C each have profits of £100.
B has a loss of £100.
In the past years B could set its loss against A’s profits, as well as against C’s profits (and so obtain relief of £200 altogether).
Under CTA10/S109 (2) B’s loss is not available for set-off against A’s profits.