»Ê¹ÚÌåÓýapp

-	Company Results	Yr1	Yr2	Yr3	Yr4	Yr5
-	CT ring fence profit/(loss) for period	(50)	(10)	30	10	40
-	Financing Costs for period	10	20	10	(20)	10
-	CT ring fence profits	-	-	-	-	-
-	CTRF profit from period	0	0	30	10	40
Less	Losses used in period	0	0	(10)	0	0
-	Net CT ring fence profits	0	0	20	10	40
-	CT ring fence losses	-	-	-	-	-
-	CTRF loss bfwd	0	(10)	(10)	0	0
Add	CTRF loss of period	(50)	(10)	0	0	0
Add	Loss carried back from following period	0	-	-	-	-
Less	CTRF loss used in period	0	0	10	0	0
Less	Group relief surrendered	40	10	0	0	0
Less	Loss carried back to prior period	-	-	-	-	-
-	CTRF loss cfwd	(10)	(10)	0	0	0
-	Calculation of adjusted ring fence profit	-	-	-	-	-
-	CT ring fence profit/(loss) for period	(50)	(10)	30	10	40
Exclude	Financing Costs of the year	10	20	10	(20)	10
-	Amount bfwd from preceding period	-	(8)	-	-	(10)
-	Adjustment for group relief surrender	32	-	-	-	-
-	Amount carried back from following period	-	-	-	-	-
-	Amount carried back to preceding period	-	-	-	-	-
-	Adjusted Ring Fence profit	(8)	2	40	(10)	40

-	Summary of tax position	Yr1	Yr2	Yr3	Yr4	Yr5
-	Ring fence CT profit	0	0	20	10	40
-	Corporation Tax due at 30%	0.00	0.00	6.00	3.00	12.00
-	Adjusted ring fence profit	0	2	40	0	40
-	Supplementary charge due at 20%	0.00	0.40	8.00	0.00	8.00

Year 1

»Ê¹ÚÌåÓýapp company has a corporation tax ring fence (CTRF) loss in the period of 50 and financing costs of 10. »Ê¹ÚÌåÓýappre is no adjusted ring fence (ARF) profit in the period.

»Ê¹ÚÌåÓýappre is a CTRF loss of 50, of this 40 is surrendered as group relief and 10 is carried forward to year 2. »Ê¹ÚÌåÓýappre is no liability to Corporation Tax (CT).

»Ê¹ÚÌåÓýappre is a shadow calculation to keep track of the financing costs that have to be excluded in calculating the ARF profit and SC. »Ê¹ÚÌåÓýapp calculation gives a negative amount of 40.

As there has been a group relief surrender a proportion of this amount is treated as excluded in calculating the ARF profit. This exclusion is calculated by reference to the proportion of CTRF losses surrendered compared with the total CTRF loss of the period.

Here 40 of the 50 CTRF loss is surrendered and so the proportion to be excluded is 4/5. An adjustment of 32 is required (4/5 x 40) and the balance of 8 is carried forward (40 -32).

No supplementary charge (SC) is due.

Year 2

»Ê¹ÚÌåÓýapp company has a CTRF loss in the period of 10 and financing costs of 20. »Ê¹ÚÌåÓýapp ARF profit in the period is 10.

»Ê¹ÚÌåÓýapp CTRF losses are tracked. »Ê¹ÚÌåÓýapp CTRF loss of 10 from the period is surrendered as group relief. »Ê¹ÚÌåÓýapp loss of 10 brought forward from year 1 is carried forward to year 3. »Ê¹ÚÌåÓýappre is no liability to CT.

»Ê¹ÚÌåÓýapp shadow calculation has an amount of 8 brought forward and this is set against the ARF profit of 10 reducing it to 2 (10 - 8). »Ê¹ÚÌåÓýappre is no amount carried forward. SC of 0.4 is due on the ARF of 2.

No adjustment is required for the loss surrendered as group relief in the year as all the finance costs are excluded in the calculation of the ARF profit of the period.

Year 3

»Ê¹ÚÌåÓýapp company has a CTRF profit in the period of 30 and financing costs of 10. »Ê¹ÚÌåÓýapp ARF profit in the period is 40.

»Ê¹ÚÌåÓýapp CTRF loss brought forward into the period is 10 and this can be set against the CTRF profit reducing it to 20 (30 -10). »Ê¹ÚÌåÓýappre is no CTRF loss carried forward. CT of 6 is due of the CTRF profit of 20.

»Ê¹ÚÌåÓýapp shadow calculation has no amount brought forward. »Ê¹ÚÌåÓýapp ARF profit for the period is 40. SC of 8 is due on the ARF of 40. »Ê¹ÚÌåÓýappre is no carry forward from the period.

Year 4

»Ê¹ÚÌåÓýapp company has a CTRF profit in the period of 10 and the financing costs are in fact income of 20. »Ê¹ÚÌåÓýappre is no ARF profit in the period.

»Ê¹ÚÌåÓýappre is no CTRF loss brought forward into the period. CT of 3 is due on the CTRF profit of 10. »Ê¹ÚÌåÓýappre is no CTRF loss carried forward.

»Ê¹ÚÌåÓýapp shadow calculation has no amount brought forward, the amount of the period of 10 is carried forward. »Ê¹ÚÌåÓýappre is no SC due.

Year 5

»Ê¹ÚÌåÓýapp company has a CTRF profit in the period of 40 and financing costs of 10. »Ê¹ÚÌåÓýapp ARF profit in the period is 50.

»Ê¹ÚÌåÓýappre is no CTRF loss brought forward into the period. CT is due on the CTRF profit of 40. »Ê¹ÚÌåÓýappre is no CTRF loss carried forward. »Ê¹ÚÌåÓýappre is a liability to CT of 12.

»Ê¹ÚÌåÓýapp shadow calculation has an amount brought forward of 10 and this is set against the ARF profit reducing it to 40 (50 -10). »Ê¹ÚÌåÓýappre is no amount carried forward. A SC of 8 is due.

Summary

This example demonstrates how in respect of the CTRF profits and losses and the finance charges of this company over the whole 5yrs, the overall effect is to charge the company on an aggregate of adjusted ring fence profits of 82, while potentially giving relief of 32 against the adjusted ring fence profits of the group relief claimant in year 1.

This latter relief assumes that the claimant is subject to the Supplementary Charge. »Ê¹ÚÌåÓýapp resulting net figure (82-32) of 50 reflects the aggregate of the RFCT profits over 5 years of 20, and the aggregate finance charges over the 5 years of 30.