Corporation Tax Act 2010 section 676CB

Restriction on surrender of carried-forward losses

Section 676CB sets out the general rule that a company may not claim group relief for carried-forward losses where those losses arose in a company before that company was acquired by the group.

• Where a company changes ownership, carried-forward losses that arose before the acquisition cannot generally be surrendered as group relief under Part 5A to another group company for any accounting period ending after the change in ownership.
• The restriction applies to amounts surrendered by the transferred company or any co-transferred company, where the losses in question are relevant pre-acquisition losses.
• Where the change in ownership occurs part-way through an accounting period, that period is split into two notional periods — one ending on the date of the ownership change and the other covering the remainder — with profits or losses apportioned between them on a time basis, unless that method would produce an unjust or unreasonable result.
• Exceptions to this general restriction exist under sections 676CD and 676CE, which may allow group relief for carried-forward losses in certain circumstances despite the change in ownership.