Corporation Tax Act 2010 section 676CC

Cases where consortium condition 1 or 2 was previously met

Section 676CC limits the amount of group relief for carried-forward losses that a transferred company can claim through a consortium relationship, where the consortium arrangement existed immediately before a change in ownership.

• Where a consortium condition was met immediately before the change in ownership ("time T"), group relief for carried-forward losses claimed by the transferred company is capped based on the ownership proportion at that point
• The cap is set at the lowest of four proportions measured at time T: ordinary share capital held, entitlement to distributable profits, entitlement to assets on winding up, and voting power directly possessed
• Where consortium condition 1 applies, these proportions are measured by reference to the surrendering company; where consortium condition 2 applies, they are measured by reference to the link company
• The accounting period in which the change in ownership occurs is split into two deemed periods — one ending at the change and one covering the remainder — with profits or losses apportioned between them on a time basis