The following Case Study is based on a past Chartered Institute of Taxation (CIOT) exam question, updated to reflect current tax rules, rates and allowances, and it is used with their permission. The question and answer have been edited to focus on the issue relevant here – the RDEC.

On 1 July 2020, Griffin Ltd acquired the entire issued share capital of Harvey Ltd. Following acquisition, Harvey Ltd changed its accounting date from 31 March to 31 December in order to align with the accounting date of Griffin Ltd. The draft tax computations for Harvey Ltd for the nine months ended 31 December 2020 show a loss before tax of £5,163,000.

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