Revenue Note for Guidance

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Revenue Note for Guidance

422 Corresponding accounting periods

Summary

This section defines a claimant company’s corresponding accounting period as one which falls wholly or partly within the accounting period of the surrendering company and provides for an appropriate restriction by apportionment on a time basis where periods do not coincide.

Details

(1) An accounting period of a claimant company falling wholly or partly within an accounting period of the surrendering company is to correspond to that accounting period.

(2) An appropriate restriction of group relief where periods do not coincide applies. In such a case the relief is limited to the lower of —

  • the proportion on a time basis of the loss, etc for the whole of the surrendering company’s accounting period which the length of the common period bears to the whole of that period, and
  • the proportion on a time basis of the total profits for the whole of the claimant company’s corresponding accounting period which the length of the common period bears to the whole of that period.

Example

Company A has a loss of €100,000 for its accounting period of 12 months to 31 December, 2002.

Company B has a profit of €80,000 for its accounting period of 12 months to 31 March, 2003.

The loss which A can surrender is limited to so much of the loss, €100,000 as is apportionable to the common period, (the 9 months to 31 December, 2002) namely —

9/12 × 100,000 = 75,000.

The profits of B against which the surrendered loss can be set off is limited to so much of its profits, €80,000, as is apportionable to the common period, namely —

9/12 × 80,000 = 60,000.

The amount on which group relief can be given is therefore €60,000 only.

If B’s profits were €120,000, the amount apportionable to the common period would be 9/12 × €120,000 = €90,000, and the amount to be relieved would be €75,000.

Relevant Date: Finance Act 2019