Corporation Tax Act 2010 section 121

The precedence condition

Section 121 resolves conflicts that arise when losses of an EEA-resident company could potentially be relieved in more than one territory within a corporate group chain.

• Where a chain of companies spans multiple territories, a loss arising in one EEA territory may qualify for relief in several intermediate territories as well as the UK.
• The section resolves this by assuming relief is given at the lowest possible level in the chain — closest to the loss-making company.
• If relief is available in an intermediate territory (other than the UK or the territory where the loss arises), that territory's claim takes precedence and the amount is excluded from UK group relief.
• The section only considers an intermediate territory if there is no other UK-resident company sitting between the surrendering company and the intermediate company in the ownership chain.