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HMRC internal manual

Compliance Handbook

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HM Revenue & Customs
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Penalties for Inaccuracies: Calculating the penalty: Losses impact on potential lost revenue calculation: Aggregate group losses

You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.

Where the effect of a careless or deliberate inaccuracy is to overstate aggregate group losses a penalty also applies but the potential lost revenue (PLR) will be calculated at the discounted rate, see CH82310 and CH82320.

An aggregate loss arises where, for all of the companies within the group for Group Relief purposes

  • the amounts available for surrender as Group Relief exceed
  • the profits chargeable to CT from which those amounts could be deducted if surrendered as Group Relief.

Where a group of companies has an aggregate loss the PLR is calculated using the losses rules, even if the inaccuracy that creates or increases the aggregate loss is an understatement of profit.

Where the inaccuracy creates or increases an aggregate loss for a group of companies you include Group Relief when calculating PLR. The restriction in CH82282 does not apply.

For examples of when

  • the understatement of profits has created an aggregate loss, see CH82342
  • the overstatement of a loss has created an aggregate loss, see CH82343
  • the understatement of profits has increased the aggregate loss, see CH82344
  • the overstatement of a loss has increased the aggregate loss, see CH82345.

FA07/SCH24/PARA7