Corporation Tax Act 2010 section 676CG

Affected profits

Section 676CG defines what counts as "affected profits" for the purposes of restricting group relief for carried-forward losses where there has been a change in company ownership accompanied by a major change in activities.

• Profits of an accounting period ending after a change in ownership are "affected profits" if they arise within 5 years of the end of the accounting period in which the ownership change occurs and can be fairly attributed to the activities or income sources that caused the major change
• Where an accounting period straddles the 5th anniversary date, it is split into two deemed accounting periods — one ending on the anniversary and one covering the remainder
• Profits or losses of the straddling period are apportioned between the two deemed periods on a time basis according to their respective lengths
• If a time-based apportionment would produce an unjust or unreasonable result, a different method that is just and reasonable must be used instead