Section IQ 7 — Income Tax Act 2007: When group membership lacking in loss period

IQ 7 When group membership lacking in loss period When this section applies (1) This section applies if— (a) a company that is part of a consolidated group has a ring-fenced tax loss consisting of either an attributed CFC net loss or FIF net loss, or both, that is carried forward to a tax year and must be used under section IQ 6 ; and (b) the company was not part of the consolidated group in the earlier tax year in which the net loss arose; and (c) the company and 1 or more of the companies in the consolidated group do not meet the requirements for common ownership of section IC 5(1)(a) (Company B using company A’s tax loss) for the loss period. Limit on amount (2) The amount that may be subtracted from the net income of the consolidated group in the tax year under section ID 2(2) must be no more than the total of— (a) the amount of ring-fenced tax loss referred to in subsection (1) that the company could use to reduce its net income in the tax year under section IQ 2 or IQ 3 as applicable, if it were not in the tax year part of a consolidated group; and (b) the amount of ring-fenced tax loss referred to in subsection (1) that the company could group with other companies in the group under section IQ 4 or IQ 5 , as applicable, determining— (i) the net income for each of the companies using the group’s calculation of each company’s net income; and (ii) the maximum amount of tax loss to be made available, ignoring the consolidation of the companies and presuming all steps required under those sections were taken in order for them to apply. Relationship with section FM 3 (3) In subsection (2), the amount of net income must be calculated in accordance with section FM 3 (Liability of consolidated groups and group companies). Meaning of loss period (4) In this section, the loss period means the tax year in which the ring-fenced tax loss arose and any tax years falling between that tax year and the tax year in which the amount is subtracted from net income. Defined in this Act: amount , attributed CFC net loss , company , consolidated group , FIF net loss , loss period , net income , ring-fenced tax loss , tax loss , tax year Compare: 2004 No 35 s IG 7(4) Section IQ 7(1)(a): amended (with effect on 1 April 2008), on 7 December 2009, by section 66(1)(a) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section IQ 7(1)(b): amended (with effect on 1 April 2008), on 7 December 2009, by section 66(1)(b) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section IQ 7(2)(a): amended (with effect on 1 April 2008), on 7 December 2009, by section 66(2)(a)(i) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section IQ 7(2)(a): amended (with effect on 1 April 2008), on 7 December 2009, by section 66(2)(a)(ii) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section IQ 7(2)(b): amended (with effect on 1 April 2008), on 7 December 2009, by section 66(2)(b)(i) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63). Section IQ 7(2)(b): amended (with effect on 1 April 2008), on 7 December 2009, by section 66(2)(b)(ii) of the Taxation (Consequential Rate Alignment and Remedial Matters) Act 2009 (2009 No 63).