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

For the latest New Development, see ND.2070.

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. Prior to changes announced in Autumn Budget 2021, the operation of the rules depend on whether the company is resident in an EEA territory or not.

However, for accounting periods ending on or after 27 October 2021, the distinction between EEA and non-EEA companies will be removed. Where a company's accounting period straddles this date, it will be deemed as separate accounting periods for the purpose of applying these changes. See ND.2070 for more information. .

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 on2:

  1.  

    •     a trade of dealing in or developing UK land (B5.216A)

  2.  

    •     any trade through a UK permanent establishment, or

  3.  

    •     a UK property business on or after 6 April 2020

Non-EEA resident companies

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