Corporation Tax Act 2010 section 188DK

Conditions 1 and 2: claimant company not controlled by surrendering company etc.

Section 188DK is an anti-avoidance rule that halves the amount of group relief for carried-forward losses a claimant company can claim through a consortium, where arrangements are in place to prevent the surrendering or link company from controlling the claimant company.

• This rule targets consortium claims for group relief for carried-forward losses where artificial arrangements prevent the surrendering company (under consortium condition 1) or the link company (under consortium condition 2) from controlling the claimant company.
• The arrangements are caught only if, without them, the surrendering or link company (alone or with other consortium members) would control the claimant company, and the arrangements form part of a scheme with a main purpose of obtaining a tax advantage.
• Where the rule applies, the claimant company's relevant maximum for the overlapping period is reduced to 50% of what it would otherwise be, effectively halving the available relief.
• This mirrors the equivalent anti-avoidance provision in section 146B for current-year group relief claims, extended here to carried-forward losses.