Chapter 21 Consortium Relief Flashcards
21.1 Consortium Relief
A consortium company is a company which is not a 75% subsidiary of any company, and at least 75% of its ordinary shares are owned by companies, each of which owns at least 5%. The companies holding at least 5% are known as consortium members. Consortium relief is a variation of group relief, where current year and brought forward losses of a consortium company can be transferred to consortium members and vice versa. The transfer of losses will be in proportion to the consortium members interest in the consortium company. Foreign companies cannot receive or surrender consortium relief but are included in the shares calculation to determine a consortium.
21.3 Available Amounts
If the consortium company is loss making, the maximum consortium relief which is available is the lower of:
• The consortium companies’ loss multiplied by the consortium member’s interest in that consortium, and
• The consortium member’s available profit
A consortium member’s interest is the lower of ordinary share capital ownership, entitlement to profits, entitlement to assets on winding up and the proportion of voting power.
A company may make a claim for consortium relief for brought forward losses to the extend that the claimant company has no brought forward losses which have not been relieved against its total profits.
21.4 Consortium company loss – deemed current year claim
Where a consortium company has other income, it is deemed that a current year claim is made before consortium relief is computed (this rule does not apply to current year group relief). It is therefore the net loss after a notional current year claim that is available to the consortium members.
Group relief also takes priority over consortium relief.
