Annex 1: Minor changes in the law Change 23: Recalculation of EEA amount: section 113 Example
An EEA company has a loss of £12,000 for the period 1 January 2010 to 30 June 2011. None of the loss qualifies otherwise for relief from corporation tax (section 402(1)(b) of ICTA). All of the loss meets the conditions in section 403F(2) of ICTA.
In this (unlikely) case, neither recalculated amount exceeds the EEA amount of £12,000. So it is apparently possible to argue that the amount available for surrender is £13,000. This result is illogical given that the EEA amount is only £12,000, but it is not explicitly excluded by Schedule 18A to ICTA. Section 113(3) removes the possibility of this illogical result by making it clear that the maximum amount available for surrender in relation to all the assumed accounting periods comprised in the EEA period cannot be more than the qualifying part of the EEA amount.
This change is adverse to some taxpayers in principle. But it is expected to have no practical effect as it is in line with generally accepted practice.