Corporation Tax Act 2010 section 730C

Disallowance of deductible amounts: relevant claims

Section 730C restricts the use of deductible amounts in certain loss relief and group relief claims where a qualifying change of ownership has taken place and the arrangements were motivated by a tax avoidance purpose.

• Where two conditions are met — that the use of the deductible amount was highly likely on the date of the qualifying change (Condition A) and that a main purpose of the change arrangements was to use the amount in a relief claim (Condition B) — the deductible amount is restricted and cannot be claimed
• The restriction applies to claims for trade loss relief against total profits, group relief, and group relief for carried-forward losses, made by the company or a connected company for accounting periods ending on or after the date of the qualifying change
• Amounts that could have been claimed regardless of the qualifying change are not caught by the restriction, ensuring that only tax-motivated deductions are disallowed
• The restriction does not apply where the deductible amount is already caught by the profit transfer rules in section 730D or the plant and machinery leasing anti-avoidance rules in sections 432 and 433