421 Relation of group relief to other relief

Summary

This section provides that group relief can be allowed only against the claimant company’s profits for the accounting period as reduced by any other reliefs except those derived from a subsequent accounting period. For this purpose, it is to be assumed that the claimant company claims any relief to which it would be entitled under section 308(4) in respect of capital allowances or under section 396(2) in respect of losses.

Group relief claimed against the profits of any accounting period must be deducted before any relief derived from a subsequent accounting period can be given against those profits.

Details

(1) The term “relief derived from a subsequent accounting period” means —

• relief under section 308(4) for capital allowances of an accounting period subsequent to the period for which group relief is claimed,
• relief under section 396(2) for a loss of an accounting period subsequent to the accounting period for which group relief is claimed, and
• terminal loss relief under section 397 on a cessation of trading in an accounting period subsequent to the one in which group relief is being claimed.

(2) Group relief, in accordance with section 420, is to be allowed as a deduction against total profits of the claimant company before those profits are reduced by any relief deriving from a subsequent accounting period (for example, the carry-back of a trading loss of a subsequent period under section 396(2)), but as reduced by any other tax relief including relief for past losses or other allowances brought forward from previous periods.

(3) Such other relief is to be determined on the assumption that the claimant company claims any relief available to it under section 308(4) (excess of capital allowances) or section 396(2) (loss in trade).

(4) Group relief for an accounting period must be given before relief deriving from a subsequent accounting period is given against the profits of that accounting period.

Relevant Date: Finance Act 2019