Corporation tax - Chapter 23 - 27 Flashcards
What are the 3 conditions for a company to be in a 75% group?
- At least 75% direct or indirect beneficial ownership of the ordinary share capital of the company.
- Rights to at least 75% of the distributable profits that are available to the equity holders.
- Rights to at least 75% of the company’s assets that are available for distribution to the equity holders on a winding up.
When must current year group relief claims be made?
Within 2 years of the end of the loss making AP.
Can pre-2017 losses be group relieved?
No
When can carried forward losses be group relieved?
Carried forward losses can only be group relieved once they have been used in the company itself.
Group companies cannot receive carried forward losses from another company in the group until they have utilised their own brought forward losses.
(50% restriction still applies above de minimis £5m).
What is a consortium company?
A consortium company is a company where at least 75% of their ordinary shares are owned by companies, each of which owns at least 5%.
Can non-UK resident companies be part of a consortium?
Yes, but losses cannot be claimed from or surrendered to them.
What is a link company and what can a link company do?
A link company is when a consortium member is also a member of a group relief group.
They allow losses to flow through them in both directions.
What is a group consortium company and what must be done with losses before calculating consortium relief?
A group consortium company is a consortium company which has its own 75% group.
When calculating consortium relief available, the company is deemed to have made any possible group relief claims first.
What is a consortium holding company?
A consortium holding company is a company whose activity is wholly or mainly the holding of shares in 90% trading subsidiaries. Losses can flow directly between the trading subsidiaries and consortium members.
Who must make the group relief claim?
The claimant company with written consent from the surrendering company.
What must be specified in a group relief claim?
- The amount claimed
- The name of the surrendering company
- The AP of the claiment which the claim relates to
What is a Group Payment Arrangement (GPA)?
A GPA is when at least 1 member of a 51% group pays tax by instalements, then the group may nominate one company to make instalment payments for the whole group.
When are GPA documents due to HMRC and what should it include?
The GPA document must be submitted to HMRC at least one month before any instalment payments are due listing all the companies which are to participate.
The application must state the start and end dates of the first period to which the arrangements are to apply, after which they automatically roll over.
When would HMRC terminate a GPA?
HMRC will terminate the arrangement if :
- One of the participating companies fails to meet its obligations to pay tax
- The nominated company breaks any of its obligation
- If they believe that any member of the group may undergo a change in ownership with outstanding CT liable.
What are the advantages of a GPA?
Advantages are ability to allocate payments between the members of the group to minimise the exposure to interest charges and reducing the administrative burden involved with QIP regime.
What are the conditions for Group Tax Surrenders?
- 75% direct and indirect relationship
- Not in a GPA
- All companies have the same AP
- Group member throughout the period
