HMRC is seeking feedback on a second tranche of draft guidance relating to reform of corporation tax loss relief, focusing on group relief for carried forward losses and the relaxation of carried-forward non-trade losses
The draft guidance has been published so that stakeholders can comment on it, and to explain the application of the legislation, which is included in clauses 18 and 19 and schedule 4 of Finance Bill: September 2017.
A first tranche of guidance was published in draft on 31 July 2017, giving a general overview and covering the general loss restriction, relaxation of trade losses and anti-avoidance rules.
The latest publication covers the technical aspects of the relaxation of non-trade deficits from loan relationships and provides a number of detailed examples.
In most cases, non-trading loan relationship deficits (NTLRDs) incurred from 1 April 2017 can be carried forward and set against total profits of later accounting periods. However, some carried-forward non-trading loan relationship deficits are still only available for set off against non-trading profits. This applies for all deficits arising prior to 1 April 2017 and to deficits of later periods if an investment business has become small or negligible or certain losses of an insurance company. In addition, carried-forward non-trading loan relationship deficits incurred by a company that is a charity are still only available for set off against non-trading profits.
A company can make a claim for carried-forward non-trading loan relationship deficits for the whole or part of the amount available for relief. This means the company may choose to set off the whole, part or, by making no claim, none of the amount available. The claim must be made within two years of the end of the period in which the company wishes to utilise the deficit or such further period as HMRC allows.
The deadline for comments is 5 January 2018.
Guidance Reform of Corporation Tax loss relief: second tranche draft guidance is here.
First tranche of guidance is here.
Report by Pat Sweet