In the context of group relief, what is a critical event that leads to a company being unable to surrender losses?

A change in share ownership is a critical event that affects a company’s ability to surrender losses for group relief purposes. Under tax legislation, specific rules govern how losses can be shared among companies within a group. When there is a change in the shareholding of a company, especially significant changes where there's a shift in the percentage of ownership, it may lead to restrictions on the relief of losses. The underlying rationale is to prevent abuse of the loss system where companies could potentially enter the group purely for the purpose of utilizing losses without a genuine business connection.

In contrast, events such as the sale of company assets, a change in the business model, or a reduction in employee headcount do not inherently affect the ability to surrender losses within group relief. These actions may have implications for the overall financial health and operation of the company, but they are not directly tied to the rules governing relief for prior period losses in the context of group taxation. Therefore, the change in share ownership is particularly critical in determining eligibility for loss surrender and group relief.