HMRC consults on simplification of group relief for carried-forward losses

HMRC has published draft regulations and a draft explanatory memorandum setting out how companies can enter into simplified arrangements in respect of claims and surrenders of group relief for carried-forward losses, which are designed to reduce the administrative burden

The Finance (No. 2) Act 2017 introduced legislation at Part 5A of the Corporation Tax Act 2010 (CTA 2010) that allows companies to surrender carried-forward losses between group companies. This relief is referred to as ‘group relief for carried forward losses’.

The new rules at Part 5A of CTA 2010 concern group relief for carried-forward losses. They allow companies to surrender carried-forward corporation tax losses to other companies in their group. This means the loss can no longer only be surrendered to other group companies in the year in which it arises.

Statutory instrument 1999/2975 allows companies to enter into simplified arrangements with HMRC in respect of surrenders and claims of such losses. A group can apply to HMRC to permit a nominated company to become authorised to make claims and surrenders of group relief on behalf of the other group companies in the group.

This instrument amends S.I. 1999/2975 such that the simplified arrangements which it provides for can also be entered into with HMRC in respect of surrenders and claims of group relief for carried-forward losses. It enables a group of companies to nominate a particular member of the group to make claims and surrenders of group relief for carried-forward losses on behalf of other group companies in the same way that they currently can in respect of claims and surrenders of group relief.

Where a company has already made an application to use simplified arrangements for group relief, it will have to make a further application should it wish to enter into simplified arrangements for group relief for carried-forward losses after the amendments made by this instrument have come into force.

The consultation closes on 13 November.

Open consultation on Draft legislation: The Corporation Tax (Simplified Arrangements for Group Relief) (Amendment) Regulations 2017 is here.

Report by Pat Sweet

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