Group relief—loss relief group
Group relief—loss relief group

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Group relief—loss relief group
  • Why does it matter?
  • What makes a group?
  • What entities can be members of a loss relief group?
  • Ordinary share capital test
  • Profits available for distribution test
  • Normal commercial loans
  • Assets used in the trade of the lender
  • Assets available on a winding up test
  • Anti-avoidance

Why does it matter?

It is common for corporate entities to operate within a group, ie several companies under common ownership. The basic UK corporation tax rules operate on a company by company basis and could in some circumstances result in unfair tax consequences for companies within such a group. As a result there are a number of UK tax rules which aim to eliminate or minimise such consequences. In some jurisdictions this is achieved by treating all the members of the group as one single taxable entity. In the UK, however, there are a number of different rules which provide specific reliefs to group members. The group relief rules allow companies within a group to surrender certain losses between certain members of the group, giving groups more flexibility in the use of losses than single companies.

This Practice Note explains what forms a loss relief group for the purposes of the group relief rules and, since 1 April 2017, also the rules on group-relief for carried-forward losses. For more information on other elements of the group relief rules, see Practice Notes:

  1. Group relief—types of losses that can be surrendered

  2. How much group relief can be surrendered and claimed?

  3. Priority between loss reliefs in loss making companies, and

  4. Procedure for claiming group relief and payments for group relief

For