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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Groups: group relief: UK permanent establishment of non-resident company - losses exempted by double taxation agreements


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

Such losses etc. cannot be surrendered as group relief if they relate to an activity which is potentially within the charge to CT, but is exempted by the provisions of a bilateral double tax agreement.

As an example, a foreign airline may have a permanent establishment in the UK within the ambit of CTA10/S5(2). However a number of bilateral double tax agreements concluded by the UK contain provisions which, in some circumstances, exempt the foreign airline from CT. In these circumstances CTA10/S107(2) prevents the surrender as group relief of any loss of the UK permanent establishment .

If any provision of a bilateral double tax agreement requires a claim before exemption is given, it is assumed that such a claim is made.