Chapter 20 Group Relief – further aspects

Question 1

20.2 Non-coterminous APs

Answer 1

Where group companies have different accounting periods, the losses and profits must be time apportioned accordingly. Group relief is only available for the common periods.
Time apportionment also applies where either company has a short accounting period.

Question 2

20.4 Company Joining and leaving a group

Answer 2

Joining – only losses made after the company joined the group can be relieved
Leaving – when leaving the group relief available is the lower of the loss until arrangements for sale and the profit until arrangements for sale. Where there is a straight forward negotiation for the disposal of shares, arrangements do not come into force until an offer is accepted subject to contract. Where the disposal requires the approval of shareholders, arrangements will not come into force until approval is given. Arrangements can exist where the sale proves abortive.

Question 3

20.8 Worldwide Groups

Answer 3

Groups can include all companies whether UK resident or not. Generally a loss of a non-resident company cannot be transferred and relieved in the UK and vice versa. An exception to this would be where the non-resident company is subject to UK corporation tax (because it has a UK permanent establishment).