Corporation Tax Act 2010 section 188EK

Condition 3 or 4: surrendering company in group of companies

Section 188EK reduces the amount of carried-forward losses that a surrendering company can make available for group relief, where that company is a member of a group, by taking into account the potential relief that could have been claimed across the group under the group condition.

• When the surrendering company belongs to a group, its surrenderable amounts attributable to the specified loss-making period are reduced (but not below nil) by a relevant amount
• The relevant amount is found by first calculating the group's potential relief — the maximum group relief for carried-forward losses that could be given if every possible claim based on the group condition were made at the maximum level
• That potential relief figure is then multiplied by a fraction: the surrendering company's surrenderable amounts attributable to the specified loss-making period divided by all of the surrendering company's total surrenderable amounts for the surrender period
• Any earlier claims for group relief for carried-forward losses based on the group condition, made in respect of losses surrendered by other members of the same group, must be taken into account before determining the maximum potential relief