CH15 - Group Relief

Question 1

Control is defined as

Answer 1

Control defined as:
Over 50% of issued share capital OR
Voting power OR
Right to receive distributable profits OR
Right to receive net assets in event of a wind up

Question 2

Implications of Association

Answer 2

Upper and Lower limits of corporate tax bracket are divided by number of associated companies including parents
Has to be above 50% ownership

Question 3

Dividends from association companies - ignore?

Answer 3

Yes - ignore, don’t come into computation

Question 4

Group Relief

Answer 4

If 75% control occurs
Losses of one member of the group surrendered to another to utilise against their TTP
Companies claiming/surrendering must be UK based.

Question 5

Maximum amount of group relief:

Answer 5

The maximum amount a claimant in the group can claim is the lower of:
LOSS company: CY Profit/Loss (inc property) + B/F Profit or Loss minus QCD Relief
PROFIT company: TTP: CY Profit/Loss (inc property) + B/F Profit or Loss minus QCD Relief

Remember you’ll need to do time apportionment if APs are different!

Question 6

Calculation of relief choice?

Answer 6

1. Group relief comes after QCDs so input the QCDs and get TTP before group relief.
2. Try to get the other companies to the lower limit, but if the loss-making company has other income e.g. interest, keep a little back to use as relief b/f above
3. Remember you can carry back the loss for the loss-making company to it’s own accounts so if the prior FY isn’t 2022, and is over the upper limit by just a little – consider this!
4. The company claiming the loss from the other group relief companies can only do so once they’ve utilized their own losses.

Question 7

75% Capital Gains Group

Answer 7

Parent company must have effective interest of OVER 50% in all subsidiaries
Once you go down the chain, if included in another capital gains group, it can’t form a separate one, unlike group relief.

Question 8

Capital Gains Group Proforma

Answer 8

Only current year chargeable gains or allowable losses can be transferred, not B/F capital losses

Question 9

Inter group transfer and sale outside of the group

Answer 9

Original cost of asset
Indexation Adjustment (bring to current value)
= Proceeds

When selling the asset outside of the group:

Sale proceeds:
Less: Proceeds from above
= Unindexed gain
Less: IA (from date of transfer within group)
= Chargeable gain

Question 10

Roll over Relief ROR

Answer 10

When one company disposes of an asset and makes a chargeable gain, and another company acquires a replacement asset