IC 5Company B using company A’s tax loss

1. Company A may make a tax loss available to company B to subtract from its net income under section IA 3(2) (Using tax losses in tax year) only if—

2. company A and company B have minimum common ownership for the relevant period as set out in sections IC 2(2) and IC 6; and
3. company A meets the requirements of section IC 7; and
4. company A has the required continuity of ownership or business activities under section IC 2(1) and, if it applies, section IC 10(2)(a); and
5. the amount falls within the limits set by section IC 8(1) and (2); and
6. the payment and notification requirements of section IC 9 are met.

7. Having met all the requirements set out in subsection (1), company A may—

8. choose to make a tax loss that it has in a tax year available to company B to use in the tax year, notifying the Commissioner as described in section IC 9; or
9. agree with company B that company B should bear the amount of company A’s tax loss, or take a share in it, in return for a payment by company B to company A by the date set out in section IC 9; or
10. apply both paragraphs (a) and (b) in relation to the tax loss.

11. Company B must subtract the amount of the tax loss referred to in subsection (2)(a) or the payment referred to in subsection (2)(b), as applicable, from its net income for the tax year in relation to which company A makes the amount available or receives the payment.

12. If company A chooses to make the amount available to company B under subsection (2)(a), the decision is irrevocable.

13. To the extent to which an amount of tax loss is subtracted from net income, a payment from company B to company A under subsection (2)(b) is not a dividend.

14. Sections IP 4 and IP 5 (which relate to losses in part-years) modify this section for part-year calculations.

15. Section IZ 7 (Grouping tax losses for tax years before 1981–82 and between 1981–82 and 1991–92) modifies the requirements of—

16. subsection (1)(a) for a tax loss component that arises in tax years between 1981–82 and 1991–92; and
17. subsection (1)(b) for a tax loss component that arises in tax years before the 1991–92 tax year; and
18. subsection (1)(a) for a tax loss component that arises in tax years before the 1981–82 tax year.

19. Section IZ 7B (Grouping tax losses for commonality periods starting before 15 March 2017 for tax years after 1990–91) modifies the requirements of subsection (1)(b) for a commonality period starting before 15 March 2017 for a tax loss component that arises after the 1990–91 tax year.

Compare

• 2004 No 35 s IG 2(2)

Notes

• Section IC 5(1)(b): amended (with effect on 15 March 2017), on 31 March 2023, by section 85(1) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
• Section IC 5(1)(c): amended (with effect on 1 April 2020), on 30 March 2021, by section 101(1) (and see section 101(2) for application) of the Taxation (Annual Rates for 2020–21, Feasibility Expenditure, and Remedial Matters) Act 2021 (2021 No 8).
• Section IC 5(8) heading: inserted (with effect on 15 March 2017), on 31 March 2023, by section 85(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
• Section IC 5(8): inserted (with effect on 15 March 2017), on 31 March 2023, by section 85(2) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
• Section IC 5 list of defined terms commonality period: inserted (with effect on 15 March 2017), on 31 March 2023, by section 85(3) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).