Corporation Tax Act 2010 section 676DC

Disallowance of group relief for carried-forward losses

Section 676DC restricts the use of group relief for carried-forward losses so that pre-acquisition losses cannot be set against gains arising from assets transferred within a group after a change of company ownership.

• This section only applies where chargeable gains or non-trading chargeable realisation gains from transferred-in assets are included in a company's total profits for the relevant accounting period.
• Pre-acquisition losses — those arising in accounting periods beginning before the change in ownership — cannot be surrendered as group relief and deducted from the portion of total profits that represents the relevant gain.
• The types of pre-acquisition loss covered include non-trading loan relationship deficits, intangible fixed asset losses, carried-forward management expenses, trade losses, UK property business losses, ring fence trade losses, and BLAGAB trade losses.
• The restriction works by preventing the surrendering company from using these historic carried-forward losses to shelter the specific gains that arise from assets transferred within the group.