Corporation Tax Act 2010 section 357JG

Restriction on deductions

Section 357JG modifies the normal group relief deduction rules where a Northern Ireland loss is surrendered against profits that include non-Northern Ireland profits, and the Northern Ireland corporation tax rate is lower than the main rate.

• When a company claims group relief for a surrendered Northern Ireland loss against profits that include non-Northern Ireland profits, and the Northern Ireland rate is lower than the main rate during the claim period, the normal deduction rules are restricted.
• Instead of the claimant company being able to deduct the full amount of the surrendered Northern Ireland loss, the deduction is reduced to a "restricted deduction" calculated under section 357JJ.
• This restriction applies whether the claim is for the whole of the surrendering company's surrenderable amounts or only for part of those amounts, provided the loss forms part of the claim.
• The restriction prevents companies from obtaining a tax benefit at the higher main rate for losses that were generated in a trading environment subject to the lower Northern Ireland rate.