Group tax issues Flashcards
What is the test to see if a company falls under group relief?
- Beneficial ownership test: Parent company must beneficially own 75% of subsidiary’s ordinary share capital (either directly or indirectly)
- Economic ownership test: Parent company must be beneficially entitled to at least 75% of profits/assets
What is the surrendering company?
The company which has losses
What is the claimant company?
Company which is claiming the other party’s losses
How does a company qualify for consortium relief?
Consortium company must:
- Be 75% owned by at least 2 companies.
- Each shareholder must own at least 5% of the company
- The consortium company cannot be a 75% subsidiary of any one company.
To surrender losses to consortium members:
- Find relevant fraction
- CC Loss x RF
To claim losses:
- Find relevant fraction
- RF x CC profit
How to qualify as same chargeable gains group:
- Beneficial ownership test - 75% subsidiary of principal, 75% subsidiaries of subsidiaries
- Company is effective subsidiary of principal. Must be entitled (direct or indirect) to 51% of profits/assets.
Consequences of being in same Chargeable Gains Group:
- No gain/No loss transfers
- Share losses
- Degrouping charge(exit)
- Rollover relief for replacement of business assets can be shared within group (gain to be rolled shared)
Groups for SDLT
Same test as for surrendering of trading losses:
75% BOT
75% EOT
When does SDLT clawback apply?
When company in same SDLT group leaves group, and they have received transfer of land without paying SDLT. (issue in share sales)
Groups for VAT
If one company controls the majority of voting rights in another company then they will pay VAT together.
Groups for corporation tax
Stops companies avoiding tax by splitting the tax bracket between the companies. Income.
