Commentary on Sections Overview Overview Section 459: Claim to set off deficit against profits of deficit period or earlier periods
1308.This section allows a company (unless it is a charity) to claim that deficits which have not been surrendered as group relief may be set off against other profits of the deficit period or carried back against profits from loan relationships in an earlier accounting period. It is based on section 83(2) and (5) of FA 1996.
1309.Section 83(2)(a) of FA 1996 (set-off against other profits of the deficit period) allows the deficit to be set off against “any profits….(of whatever description)”. “Profits of any description” are the “total profits” in section 9(3) of ICTA and this is reflected in subsection (1)(a).
1310.Section 83(2)(c) of FA 1996 (set-off carried back to earlier periods) refers only to set-off “against profits”. Paragraph 3(4) of Schedule 8 to FA 1996 makes it clear that the profits in section 83(2)(c) are only profits on non-trading loan relationships. This restriction has been brought out in subsection (1)(b). Full details of the profits against which a deficit can be set under subsection (1)(b) are given in section 463 (signposted in subsection (6)).
1311.Section 83(5) of FA 1996 has been rewritten in subsection (3) and excludes charities from making a claim under subsection (1) of this section. Before its repeal in FA 2002 section 83(2)(b) of FA 1996 allowed deficits to be surrendered as group relief. Section 83(5) was not consequentially amended when section 83(2)(b) was repealed and continues to refer to group relief.
1312.The reference to group relief is unnecessary since section 403(2) of ICTA, which allows non-trading deficits for the purposes of group relief, only provides for deficits to which section 83 of FA 1996 applies (see section 403ZC of ICTA). So all that is necessary to prevent the deficit of a charitable company from being surrendered as group relief is to provide that claims under this section may not be made in respect of the deficits of a charitable company and this is what subsection (3) does.