Commentary

D2.411 Relevant group—General rule

Corporate tax
Corporate tax | Commentary

D2.411 Relevant group—General rule

Corporate tax | Commentary

D2.411 Relevant group—General rule

The rules in this article and apply only where the loss buying rules (D2.402–D2.406) do not apply. As a result, for accounting periods ending after 4 December 2005, the following provisions normally only apply in cases where there is no arrangement for avoiding tax, eg on a merger or takeover.

Post 19 July 2011

The restrictions on the set-off of allowable losses apply generally to pre-entry losses of a company which joins a group of companies (the 'relevant group'). As part of the changes to the pre-entry loss regime introduced by Finance Act 2011, the extensive definition provided of a relevant group (see below) was repealed. Instead the general CGT definition of a group now applies (D2.305)1. This definition applies in relation to the set off of pre-entry losses on or after 19 July 2011 irrespective of when they accrued or when the company joined the relevant group2.

Pre 19 July 2011

Overview

Prior to the introduction of the rules introduced by Finance Act 2011, the restriction on the set-off of allowable losses applied generally to pre-entry losses of a company which joined a group of companies (the 'relevant group')3, provided the relevant group fell within one of the following five defined categories4:

  1.  

    •     Category 1: a group which a company joined after realising a loss

  2.  

    •     Category 2: a group of which the company is a member of at the time of realising the loss

  3.  

    •     Category 3: any other group of which the company was a

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