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HMRC internal manual

Corporate Finance Manual

Loan relationships: consortia companies and impairment: amount of restriction

Amount of restriction

CTA09/S365 requires a comparison of

  • the total impairment losses and release debits brought into account in respect of all the relevant creditor relationships of the consortium member and all the companies in its group, and
  • the total credits brought into account by the debtor companies in the group in respect of those relevant creditor relationships.

The excess of the debit over the credits is the ‘net consortium debit’.

If group relief is claimed by the consortium member company or the other companies in the group, the impairment debits and release debits (called the ‘relevant debits’) are reduced. The amount of the reduction is calculated in two steps.

Step 1 is to find the total group relief the debtor companies can surrender and the creditor companies have claimed.

Step 2 is to apportion that figure between the relevant debits, not exceeding the amount of the relevant debits if the group relief is more.

Where CTA10/S143 applies to limit the amount of a consortium claim, S143 has priority.