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HMRC internal manual

Company Taxation Manual

From
HM Revenue & Customs
Updated
, see all updates

Groups: group relief: surrendering company not UK resident: examples: comparison of UK and EEA loss

Example 1

Assume there are differences between UK and foreign measures of income and expenditure. Accounting standards for example may differ concerning recognition of income.

Foreign computation

Foreign trading loss (£200)
   
Unrelievable foreign loss (£200)

UK recomputation

UK trading loss (because of UK GAAP conversion*) (£50)
   
UK measure of losses available for group relief (£50)

*Because of differences in income recognition in UK GAAP versus foreign stateaccounting rules.

The amount of the trading loss available for surrender is the amount computed on UK taxprinciples. The amount here is £50.

Example 2

Foreign computation

Foreign trading loss (£200)
   
Unrelievable foreign loss (£200)

UK recomputation

UK trading loss (e.g. because of timing differences*) (£350)
   
UK measure of losses available for group relief (£350)

*(If the differences between the UK and foreign measure of income result from timingissues, so the additional £150 of loss would either have already been recognised in theforeign territory in an earlier period or will be recognised in a later period and sopossibly be relievable in a future period.)

The amount of the trading loss available for surrender is £200.