Part 14Change in company ownership
F1CHAPTER 2CDisallowance of group relief for carried-forward losses: general provision
676CCCases where consortium condition 1 or 2 was previously met
1
Subsection (4) applies in relation to a claim for group relief for carried-forward losses by the transferred company if conditions A and B are met.
2
Condition A is that the claim is—
a
for an accounting period ending after the change in ownership, and
b
in respect of a relevant pre-acquisition loss.
3
Condition B is that consortium condition 1 was met in relation to—
a
the transferred company (as the company owned by a consortium as mentioned in section 188CF(1)(b)), and
b
the surrendering company (as the company mentioned in section 188CF(1)(c)),
immediately before the change in ownership (“time T”).
4
The relief given under section 188CK in respect of the transferred company's total profits of the claim period may not exceed the relief that would be available on the assumption that the claim is based on consortium condition 1 and the ownership proportion for the purposes of that condition is equal to the lowest of the following proportions—
a
the proportion of the ordinary share capital of the transferred company that was beneficially owned by the surrendering company at time T,
b
the proportion of any profits available for distribution to equity holders of the transferred company to which the surrendering company was beneficially entitled at that time,
c
the proportion of any assets of the transferred company available for distribution to such equity holders on a winding up to which the surrendering company would be beneficially entitled (as determined at that time), and
d
the proportion of the voting power in the transferred company that was directly possessed by the surrendering company at that time.
5
Subsection (8) applies in relation to a claim for group relief for carried-forward losses by the transferred company if conditions A and B are met.
6
Condition A is that the claim is—
a
for an accounting period ending after the change in ownership, and
b
in respect of a a relevant pre-acquisition loss.
7
Condition B is that consortium condition 2 was met in relation to—
a
the transferred company (as the company owned by a consortium as mentioned in section 188CG(1)(b)), and
b
the surrendering company (as the company mentioned in section 188CG(1)(c)),
immediately before the change in ownership (“time T”).
8
The relief given under section 188CK in respect of the transferred company's total profits of the claim period may not exceed the relief that would be available on the assumption that the claim is based on consortium condition 2 and the ownership proportion for the purposes of that condition is equal to the lowest of the following proportions—
a
the proportion of the ordinary share capital of the transferred company that was beneficially owned by the link company at time T,
b
the proportion of any profits available for distribution to equity holders of the transferred company to which the link company was beneficially entitled at that time,
c
the proportion of any assets of the transferred company available for distribution to such equity holders on a winding up to which the link company would be beneficially entitled (as determined at that time), and
d
the proportion of the voting power in the transferred company that was directly possessed by the link company at that time.
9
For the purposes of this section—
a
the accounting period of the surrendering company mentioned in subsection (3)(b) or (7)(b) (as the case may be) in which the change in ownership occurs is treated as two separate accounting periods, the first ending with the change and the second consisting of the remainder of the period, and
b
the profits or losses of the accounting period are apportioned to the two periods.
10
Any apportionment under subsection (9)(b) is to be made on a time basis according to the respective lengths of the two periods.
11
In this section—
“the link company” means the company which is the link company (see section 188CG(1)(d)) for the purposes of the meeting of consortium condition 2 as mentioned in subsection (7),
“the claim period” and “the surrendering company” has the same meaning as in Part 5A (see section 188FD(1)).
12
Chapter 6 of Part 5 (equity holders and profits or assets available for distribution) applies for the purposes of subsections (4)(b) and (c) and (8)(b) and (c).
Pt. 14 Ch. 2C inserted (with effect in accordance with Sch. 4 para. 190 of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 4 para. 77