Corporation Tax Act 2010 section 188BE

Restriction where surrendering company could use losses etc. itself

Section 188BE prevents a company from surrendering carried-forward losses or other amounts to another group company where it has not fully used those losses against its own profits up to the permitted limit.

• A company cannot surrender carried-forward losses to another group company if it has unused capacity to deduct those losses against its own taxable profits.
• The restriction applies where the corporate loss restriction rules (the cap on carried-forward loss deductions) are relevant in calculating the surrendering company's taxable total profits for the period.
• Specifically, the block on surrender arises where the total deductions the company has actually claimed for the period are less than the maximum it was entitled to claim under the loss restriction cap.
• The company must first use its own losses up to the maximum permitted level before any surplus losses can be surrendered to fellow group companies.