Ch.4 - Groups and consortia Flashcards
What are the conditions of loss relief group?
- Loss group relief is available to members of 75% group (direct and indirect holding must be over 75%). Each company can be a member of more than 1 group.
- Claiming and surrendering company must be UK resident.
- Losses carried back cannot be surrendered.
How is maximum avalaible loss of surrendering company calculated?
- CY trading income loss
- CY NLTR decifit
- CY excess QCDs*
- CY excess property loss*
- CY excess mgmt expenses*
*excess that may not be utilised in the CY by the surrendering company
Post 1 April 2017, following cf losses can also be surrendered (after being utilised in surrendering company first):
- trading losses (arising post 1 April 2017)
- NLTR deficits (arising post 1 April 2017)
- losses on non-trading IFAs
- property losses
- mgmt expenses
How are maximum available profits of claimant company calculated?
Maximum loss relief = TTP - Less: - CY trading losses (deemed claim) - bf trading losses relieved - CY NTLR deficits relieved - bf NTLR decifits relieved - CY property losses - bf property losses
What is the restriction on losses carrief forward within loss relief group?
The cf deductions allowance of £5m applies to the loss relief group as a whole. The group allocates the allowance between its members.
What are restrictions on group relief where there is a CIO?
On or after 1 April 2017, any carried forward losses cannot be surrendered for group relief within 5 years of the CIO.
What influencing the tax planning in group losses?
- may transfer loss to remove the need for payments of CT by instalments
- relevant maximum allowance needs to be considered for the group as a whole
- pre 1 April 2017 losses should be utilised first as they are less flexible
- where the group has an oveseas income, it is important not to waste double taxation relief
- company can choose to disclaim capital allowances
What is consortium?
Consortium exists where 20 or fewes UK or overseas companies (Consortium Members) each own at least 5% and jointly own at least 75% of a UK company (Consortium Company).
No member can own more than 75% of shares individually, otherwise they forma a losses group.
How are losses relieved in consortium?
Losses can be surrendered in each direction, between consortium company and its members, however losses cannot be surrendered between the consortium members only.
How are losses surrendered from consortium company?
- consortium company can surrender its losses to consortium members but it is FIRST assumed to make CY claim itself
- amount that can be surrendered is lower of:
a) member’s % of consortium company’s loss
b) available TTP of member
How are losses surrendered from consortium members?
Consortium company can accept the loss that is lower of:
a) member’s loss
b) member’s % of the consortium company’s TTP
How are losses surrendered from group/consortium companies (consortium company is also part of a group)?
Group relief takes precendence over consortium relief. Maximum group relief is claimed before calculating loss available for consortium relief.
How are losses surrendered from link companies (consortium member is also part of a group)?
Losses can be passes through the link company to consortium company.
How can group pay CT by arranged installments?
- available where more than one company in the group pays by instalments
- can include companies that do not pay CT by instalments as well
- estimates of payments are based on group forecasts
- group payments reduce the impact of the difference in rate of interest on overpaid or underpaid tax
What is chargeable gains group?
Direct holding must be at least 75% and indirect holding must be over 50%. CY chargeable gains or losses can be reallocated within the group.
When does NGNL transfer between group becomes chargeable?
- the recipient company sells the asset outside the group
- the recipient company leaves the group within 6 years still owning the asset (degrouping charge (DGC) applies)
