Corporation Tax Act 2010 section 109

Restriction on losses etc surrenderable by dual resident

Section 109 restricts the ability of dual resident companies that are primarily investment-focused from surrendering losses or other amounts as group relief.

• A company that is resident in both the UK and another territory for tax purposes is classed as a dual resident company and may be restricted from surrendering losses as group relief.
• The restriction applies if the company is not a trading company throughout the surrender period (Condition A), or if its main function involves investment-type activities such as holding shares, making loan payments, or making charitable donations (Condition B).
• The restriction also applies if the company carries on investment-type activities to an extent not justified by its trade, or for purposes not appropriate to its trade, preventing an investing company from being disguised as a trading company (Condition C).
• If any one of these three conditions is met, the dual resident company is completely barred from surrendering any losses or other amounts under the group relief provisions.