INTM167310 - UK residents with foreign income or gains: corporation tax: Loan relationships - relief for foreign tax - identification of UK tax - Example 7

There are credits relating to interest which has suffered foreign tax but a Loan Relationship deficit overall, part of which the company surrenders as group relief or carries back or forwards to other accounting periods under CTA09/S459 or CTA09/S457:

The figures are as in example 5 (see INTM167290). The company claims to treat £400 of the deficit in one or more of the ways indicated and claims relief for the balance of £600 against other profits of the accounting period under CTA09/S459.

For the purpose of allowing credit relief in respect of the foreign interest of £500 the computation is restated to show UK tax chargeable on the credits of £500 + £600 + £800 and to show separately debits of £2,500 (that is, the aggregate of the debits of £2,900 less £400 which is the amount of the deficit to which the claims for relief under CTA09/S459 and S457 relate) which are then treated as available to be set against profits of any description for that accounting period under TIOPA10/S52. Taking account of other profits for the accounting period the result would be as follows

-	Trade	Loan Relationship	-	Property Income	Foreign dividend	Total
Profits	2,000	(600)	-	500	1,000	2,900
Restated as	Trade	Loan Relationship (i)	Other Loan Relationship	Property Income	Foreign dividend	Total
Profits	2,000	500	1,400	500	1,000	5,400
less Loan Relationship debits (ii)	(600)	-	(1,400)	(500)	-	(2,500)
-	1,400	500	-	-	1,000	2,900

Notes:

i) see note (i) to example 1.

ii) see note (ii) to example 5. In this example debits of £600 must be set against the profits identified in the claim under CTA09/S459.