Corporate loss reform – updated draft legislation | KPMG | UK
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Corporate loss reform – updated draft legislation

Corporate loss reform – updated draft legislation

Updated draft legislation has been published for the corporate loss reform, which will apply from 1 April 2017.


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As covered in last week’s Tax Matters Digest, the Government has confirmed that the measures originally contained in Finance Bill 2017, then dropped from the Bill ahead of the general election, will appear in a Finance Bill to be published after the summer. For some measures, updated draft legislation has been published, including the corporate loss reform rules. As with many of the other measures, the 1 April 2017 start date has been retained, as well as a number of other draft changes.

The key points of interest in the draft legislation to companies generally are:

  • Additional sections are inserted into Part 22 Ch 1 CTA 2010 (Transfers of trade without a change of ownership) to allow post-1 April 2017 trading losses to be transferred between companies under common ownership. However, if there is a change in ownership of the transferor company; the transfer of trade occurs within a period of eight years beginning before the change in ownership; and the transferor and transferee companies are not in a CT group relief group at the time of the change in ownership and the transfer of trade, then, until the end of the fifth anniversary of the accounting period of the transferor in which the change in ownership occurred, the transferee can only set the losses against profits of the transferred trade, not against total profits, and cannot surrender the losses as carried forward losses group relief;
  • s99 CTA 2010 (Surrendering of losses and other amounts) is amended to ensure that post-1 April 2017 non-trading loan relationship deficits can be surrendered as current year group relief;
  • Amendments have been made to the carried forward losses group relief rules so that they work as intended in circumstances where the claimant company’s profits are less than the amount of its deductions allowance; and
  • The Corporate Loss Reform Targeted Anti-Avoidance Rule (TAAR) is amended so that it can apply to a tax advantage arising as a result of the deduction of carried forward post 1 April 2017 non-trading loan relationship deficits.

For further information please contact:

Iain Kerr

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