Corporation Tax Act 2010 section 676CF

Cases where Chapter 2, 2A or 3 also applies

Section 676CF restricts group relief for carried-forward losses where a change in company ownership triggers both the Chapter 2C rules and one or more of the other loss restriction chapters (Chapter 2, 2A or 3).

• This section applies where a change in company ownership engages Chapter 2C together with Chapter 2 (trading loss disallowance following a major change in trade), Chapter 2A (post-April 2017 loss restrictions linked to changes in a company's activities), or Chapter 3 (restrictions for investment business companies)
• Where there has been a major change in the nature, conduct or scale of the company's trade or business following the ownership change, the company cannot use pre-acquisition carried-forward losses to claim group relief against "affected profits" — broadly, profits arising after the change in ownership that relate to the changed activities
• For the purpose of applying these rules, the accounting period in which the ownership change occurs is split into two deemed periods: one ending at the date of the change, and one covering the remainder — with profits or losses apportioned between the two on a time basis
• If a straightforward time-based apportionment would produce an unjust or unreasonable result, a different method that is just and reasonable must be used instead