CFM35710 - Loan relationships: consortia companies and impairment: carry forward of group relief

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CTA09/S369

Carry forward of group relief

Whenever there is a group relief claim but no debits for impairment (after any reduction in bad debts brought about under CTA09/S365) in the group accounting period, CTA09/S369 ensures that the amount of that group relief claim is taken into account when considering subsequent restrictions under CTA09/S365. This caters for situations where the claimant makes a group relief claim but defers charging the corresponding impairment debit to a later year.

In the example at CFM35670, WD Ltd wrote off £100,000 of a £200,000 loan to a consortium company in Year 1. This debit was restricted to £68,000 because of a group relief claim of £32,000.

In Year 2 there is a group relief claim of £130,000 but no impairment debit.

In the following period (Year 3) there is no group relief claim, but there is an impairment debit of £70,000.

Year 2

CTA09/S368 reduces the group relief claim to £62,000 by past impairment loss relief given of £68,000. This reduced group relief claim is allowed, but because there is no relevant net debit in the year, this sum is also carried forward under CTA09/S369. It will be treated as group relief of the following period for the purposes of CTA09/S365 only.

Year 3

CTA09/S365 reduces the impairment debit by group relief. Here there is no group relief claim of the year, but group relief of £62,000 has been carried forward under CTA09/S369. The impairment debit is restricted by £62,000, leaving a relievable debit of £8,000.

Example

Y	Impairment	Adj imp’t	Cumulative adj	Cum net debits	Group relief	Adj group relief	S367 cf	Total relief
1	100,000	68,000	32,000	68,000	32,000	32,000	0	100,000
2	0	0	32,000	0	130,000	62,000	62,000	62,000
3	70,000	8,000	94,000	8,000	0	0	0	8,000