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GB 3BAC: Arrangements to shift expenditure from companies carrying forward loss balances
or “Rules against shifting expenses from companies with tax losses to avoid tax”
You could also call this:

“Rules for companies trying to use past losses to reduce earlier tax bills”

You need to know about a rule that stops companies from using special arrangements to carry back their net losses unfairly. This rule applies when a company (called the loss company) or another company has made changes to their shares. These changes might include altering the rights that come with owning the shares. If these changes are made to help the loss company meet the requirements of section IZ 8, which is about using a net loss from 2019-2020 or 2020-2021 as a tax loss in the year before, and the main reason for making these changes is to get around what section IZ 8 is meant to do, then the rule kicks in. When this happens, the loss company is treated as if it doesn’t meet the requirements of section IZ 8 for those shares. This means they can’t use their losses in the way they were trying to.

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Next up: GB 4: Arrangements for grouping tax losses: companies

or “Rules for companies sharing tax losses within a group”
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Part G Avoidance and non-market transactions
Avoidance: specific

GB 3BArrangements for carrying back net losses: companies

  1. This section applies when—

  2. a share in a company (the loss company) or another company has been subject to an arrangement, including an arrangement directly or indirectly altering rights attached to the shares; and
    1. the arrangement allows the loss company to meet the requirements of section IZ 8 (Election to use net loss for 2019–20 or 2020–21 year as tax loss in preceding year); and
      1. a purpose of the arrangement is to defeat the intent and application of section IZ 8.

        1. The loss company is treated as not meeting the requirements of section IZ 8 in relation to the shares.

        Notes
        • Section GB 3B: inserted (with effect on 15 April 2020), on , by section 7 of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 (2020 No 10).