CT Groups

Question 1

what are the rules for pre entry capital losses when a company joins a capital gains group?

Answer 1

losses can only be used on the joining company’s gains made on assets that were:

• disposed of in the current year of the loss provided the disposal occurred prior to the date the company joined the group.
• disposed of after they joined the group that they owned before they joined the group.

-bought after joining the group from 3rd parties for use in the business.

Question 2

what is the capital loss bought forward restricted to?

Answer 2

the capital loss bought forward to use against gains is restricted to £5m.

Question 3

what are the ruled for the DE grouping charge?

Answer 3

-if a company in a CGG leaved owning a tangible asset that was received from another group in the last 6 years then a degrouping charge needs to be calculated.

• initial transfer of asset occurs at no gain or loss.
• when de group occurs at MV of asset less value at purchase
• STAMP DUTY will also be charged if a company leaves within 3 years of a transfer of an asset from another group.

Question 4

what are the rules for consortium relief?

Answer 4

• owners need to have at least 5% shareholding and total shareholding needs to be at least 75%.
• overseas companies count as members but they dont participate in loss relief.
• loss can only be shared between consort company and one member- all members have to agree to any claim for relief.
• CC can only surrender the proportion of its loss that is owned by the CM.

Question 5

what are the rules for a capital gains group?

Answer 5

• a capital gains group is a parent company and its 75% subsidiary’s and their 75% subsidiaries. parent company must have effective interest of more than 50% in all companies.
• An overseas resident company cannot transfer assets at no gain, no loss within a capital gains group.

Question 6

rules for group relief?

Answer 6

75% of the trade must be owned 1 year before and 2 years after trade.
relief that can be claimed is lower of:
- the available loss of surrending company
- the available profits of the claimant company

• loss brought forward can only be surrenderd if the loss making company cannot utilise the loss itself.
• pre acquisition trading losses will not be available for group relief for the next 5 years.