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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Groups: group relief: UK permanent establishment of non-resident company – determining amount available for surrender in the UK for an EEA resident company

For general guidance about the surrender as group relief of losses and other amounts (CTM80110) of a UK permanent establishment of a non-resident company see CTM80310.

For companies resident in the European Economic Area (EEA), any part of a loss attributable to its UK permanent establishment on or after 1 April 2013 that has not been relieved against non-UK profits in a foreign jurisdiction will be available for surrender as group relief (CTM80315).

See CTM80332 for guidance on identifying the extent to which losses and other amounts attributable to a UK permanent establishment have been relieved against non-UK profits of a foreign jurisdiction.

Where losses and other amounts attributable to a UK permanent establishment are relieved against non-UK profits they will be calculated in accordance with the tax rules of that other territory. There will be differences between the calculation for UK tax purposes and the calculation in another jurisdiction, so the calculation of the UK amounts that remain unused, and therefore available to surrender as group relief, may not be straightforward.

CTA10/S107 is silent on how such amounts should be calculated, recognising that what is appropriate in one case may not be appropriate in another; a just and reasonable basis is therefore implied.

An apportionment method will generally be just and reasonable, i.e. if 80% of the permanent establishment losses for the year have been used against non-UK profits, then 20% of the permanent establishment losses calculated for UK tax purposes would be available for surrender as group relief.

The maximum amount available for surrender as group relief are the losses and other amounts that may be surrendered that are attributable to the UK permanent establishment for UK tax purposes (see CTM30145). Any just and reasonable calculation must adhere to this principle.