Corporation tax and groups

Question 0

What is a regrouping charge and how is it calculated?(4)

Answer 0

Where a company leaves a capital gains group within 6 yrs of acquiring an asset on a no gain/loss while still in ownership
Gain is amount that would have been charged on transfer
Not possible to claim roll over relief in respect of degrouping charge
Substantial holding exemption would apply

Question 1

When does a consortium exist?(4)

Answer 1

When 2 or more companies own 75% of another with at least 5% holding
Consortium company cannot be a member of a 75% loss group
Losses cannot be surrendered among consortium members
The maximum loss that can be surrendered lower of % ownership and profit of member

Question 3

What are the five different tax group relationships?

Answer 3

Associate companies
VAT groups
75% loss groups
Consortiums
75% capital gains groups

Question 4

What is the substantial share exemption and what conditions must be met for it to be satisfied?(2)

Answer 4

Where investing company owns10% of assets on winding up, shares, share of profits
Must be satisfied for 12 consecutive months for the past two years prior to disposal.

Question 5

What items does transfer pricing legislation cover and the main exemption to the legislation?(4)

Answer 5

Sales
Letting/hiring of property
Loan interest
Exemption if firm is small/medium

Question 6

What must one take into consideration when allocating losses

Answer 6

Whether a business or a company is being purchased
Business is the same trade as one currently being carried out
Carried forward losses can only be relieved in same trade
Allocated against companies @ marginal rate, large company rate and finally at small company rate.