D2.216 Group relief of current year losses—overlapping accounting periods
The losses of the surrendering company may only be set against total profits of the claimant company where they arise in the overlapping accounting period. Where the full accounting periods of the two companies does not overlap, the profits and losses must be apportioned. This is commonly an issue where the accounting period end date of the two group companies is different or where one company joins or leaves the group part way through an accounting period.
An overlapping accounting period means the period1:
• which is common to the claimant company and surrendering company for which the claim is made, and
• throughout which both companies were members of the group
Alpha Ltd owns all the shares in Beta Ltd; both companies make up accounts to 30 September. On 1 January 2019 Alpha Ltd acquires all the shares of Gamma Ltd which makes up its accounts to 31 March.
Beta Ltd has a trading loss for the year to 30 September 2019 and Gamma Ltd claims group relief for its accounting period ending 31 March 2019 in respect of that loss.
The period common to the accounting periods of Gamma Ltd and Beta Ltd is 1 October 2018 to 31 March 2019, but as Gamma Ltd was not a member of the Alpha Ltd group until 1 January 2019, the overlapping accounting period will be restricted to 1 January 2019 to 31 March 2019.
Although the claimant and surrendering companies must be grouped throughout