Commentary

D2.260 Group relief—overseas companies with surrenderable losses

Corporate tax
Corporate tax | Commentary

D2.260 Group relief—overseas companies with surrenderable losses

Corporate tax | Commentary

Group relief—restrictions on losses surrenderable by overseas entities

D2.260 Group relief—overseas companies with surrenderable losses

Where a non-resident company is within the scope of UK tax (for example, it has a UK permanent establishment which is loss making), the amount that it can surrender as group relief can be restricted. The operation of the rules depend on whether the company is resident in an EEA territory or not. It should be noted that these rules only impact where the non-resident company is the surrendering company. Where the non-resident company with the UK permanent establishment is the claimant company, then it may claim group relief against its UK chargeable profits in accordance with the usual group relief rules.

If tax relief is restricted, there can be no surrender, as group relief, or group relief for carried forward losses, of a loss or other amount of a non-UK resident company that is carrying on1:

  1.  

    •     a trade of dealing in or developing UK land (B5.255)

  2.  

    •     any trade through a UK permanent establishment, or

  3.  

    •     a UK property business on or after 6 April 2020

Non-EEA resident companies within the scope of UK corporation tax

Where group relief is available, the amount that can be surrendered by the non–resident company is restricted to losses or other amounts which fulfil the following conditions:

  1.  

    (a)     the losses etc must be attributable to activities that are within the charge to UK corporation tax2 and would not be exempt from corporation tax by virtue of any double

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