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The losses of the surrendering company may only be set against total profits of the claimant company where they arise in the overlapping accounting period. Where the full accounting periods of the two companies does not overlap, the profits and losses must be apportioned. This is commonly an issue where the accounting period end date of the two group companies is different or where one company joins or leaves the group part way through an accounting period.

An overlapping accounting period means the period¹:

1. Ìý

   •ÌýÌýÌýÌý which is common to the claimant company and surrendering company for which the claim is made, and

2. Ìý

   •ÌýÌýÌýÌý throughout which both companies were members of the group

Example 1

Alpha Ltd owns all the shares in Beta Ltd; both companies make up accounts to 30 September. On 1 January 2019 Alpha Ltd acquires all the shares of Gamma Ltd which makes up its accounts to 31 March.

Beta Ltd has a trading loss for the year to 30 September 2019