Taxes Consolidation Act 1997 section 420A

Group relief: relevant losses and charges

Section 420A restricts group relief for relevant trading losses and relevant trading charges on income, ring-fencing losses from trades taxed at 12.5% so that they can only be offset against income of the same character in a fellow group company.

• A relevant trading loss is a loss from a trade whose profits are taxed at 12.5%; it cannot be surrendered under the normal group relief rules in sections 420 and 421 to reduce the total profits of a claimant company.
• Instead, such a loss may be offset only against the claimant company's relevant trading income, qualifying non-life insurance and life assurance shareholder income, and certain foreign dividend income taxed at 12.5%, all reduced first by any charges or losses already offset under sections 243A and 396A.
• Group relief under this section must be applied after trading losses brought forward under section 396 but before terminal loss relief carried back under section 397.
• Where the surrendering company is a consortium member, only a fraction of the relevant trading loss corresponding to that member's shareholding in the consortium may be offset, subject to any further reduction under section 422(2).