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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
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Groups: group relief: non coinciding accounting periods or group relationships - apportioned amount not to exceed total loss

CTA10/Ss139 and 140

The amount to be apportioned under CTA10/Ss139 and 140 is the total profits against which group relief is to be allowed or the surrenderable amounts to be surrendered.  The amount that is apportioned to an overlapping period cannot exceed the available total profits or the surrenderable amounts.

Where the company is a claimant company, the amount to be apportioned is the available total profits of the accounting period against which group relief may be allowed (CTM80400).  An accounts based apportionment (CTM80265) may have the effect of apportioning more than the profits of the accounting period to an overlapping period.  If so, the whole of the available total profits, and no more, is apportioned to the overlapping period for which the result is a profit.

Similarly, for a surrendering company, if the amount of the surrenderable amounts apportioned to an overlapping period exceeds the surrenderable amounts for the whole accounting period, the whole of the surrenderable amounts, but no more, of the accounting period are apportioned to the overlapping period.

Where the company is a surrendering company, and the amount to be surrendered is made up of one or more ‘relevant amounts’, that is:

  • qualifying charitable donations (CTM80130),
  • UK property business losses (CTM80135)
  • excess management expenses (CTM80140), and
  • non-trading losses on intangible fixed assets (CTM80141),

Then you should calculate the excess of the total ‘relevant amounts’ over the “profit-related threshold” (or ‘gross profits’, for surrender periods prior to 20 March 2013) for the whole period using the method in CTM80142 then apportion this to be set off against the claimant company’s available total profits for the overlapping period.

If there is no excess of, say, qualifying charitable donations over the profit-related threshold for the accounting period there is no possibility of apportioning those donations to an overlapping period.

Where the amount to be surrendered is excess capital allowances (CTM80120) the amount to be apportioned and set off against the claimant company’s profits is the excess of allowances over income from a qualifying activity of special leasing.