Taxes Consolidation Act 1997 section 420B

Group relief: Relief for certain losses on a value basis

Section 420B provides group relief on a value basis where a surrendering company has incurred trading losses or excess charges on income in a trade taxed at the standard 12.5% corporation tax rate.

• Where a surrendering company has a relevant trading loss or excess of relevant trading charges that cannot be fully relieved within the group under sections 243A, 396A or 420A, the unrelieved balance (the "relievable loss") may be surrendered to a claimant company.
• The claimant company's relevant corporation tax for the corresponding accounting period is reduced by the relievable loss multiplied by the standard corporation tax rate (currently 12.5%), giving relief on a value basis rather than a pound-for-pound basis.
• The amount of loss treated as having been surrendered and used is then grossed back up by dividing the tax reduction by the same rate, so that the correct quantum of losses is recorded as consumed.
• "Relevant corporation tax" for this purpose excludes tax withheld under sections 239 and 241, undistributed income surcharges under sections 440 and 441, and any corporation tax attributable to a life assurance company's policyholders' profits.

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