Commentary

D2.253 Change of ownership and group relief for carried forward losses

Corporate tax
Corporate tax | Commentary

D2.253 Change of ownership and group relief for carried forward losses

Corporate tax | Commentary

D2.253 Change of ownership and group relief for carried forward losses

Change in ownership and group relief for pre-acquisition carried forward losses

On a change of ownership (D1.1125) on or after 1 April 2017, pre-acquisition carried forward losses cannot be surrendered into the new group for a period of five years following the change in ownership1.

This restriction applies not only to the transferred company, but also to any company which is related to the transferred company both immediately before and after the change in ownership2.

Companies are 'related' to each other if they are members of the same group or consortium (as defined for group relief for carried forward losses; see D2.205)3. Note, there is no restriction on other companies within the group from surrendering losses incurred in any period to transferred or co-transferred companies. Also where companies are transferred together as a group, they can continue to surrender losses etc between each other for the five year period — they are just restricted from surrendering pre-acquisition losses to other group members4.

Example

Companies A and B (who are in the same group for the purposes of group relief for carried-forward losses) are acquired by company Z, for the next five years neither company A nor company B will be able to surrender losses incurred before the change in ownership to company Z. However, companies A and B are still able to surrender losses incurred before the change to one another.

If the change in ownership happens part way

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