Groups Of Companies Ch21

Question 1

What is the condition for group relief to exist

Answer 1

When one company owns at least 75% of the ordinary share capital (direct) and 75% indirect holdings.

Foreign companies can provide a link between a uk holding company and a uk sub sidiary (no relief though)

Question 2

What can A ltd transfer to B ltd in a group relief

Answer 2

Current period:
Trading losses
NTLR deficits
Excess QCD’s
Excess property losses

Bf:
Trading losses
NTLR deficits
Property losses

Question 3

How much group relief can you surrender?

Answer 3

Maximum group relief lower of:
1.company A’s loss (if bf loss then only if it is unable to use it vs its own profits)
2. Company B’s TTP for the same period after the deduction of B’s total current period and bf losses

Question 4

What is consortium relief criteria

Answer 4

A consortium owned company (ConCo) is owned by a consortium if:

1. > =75% of its share capital is owned by consortium members each of whom have >=5% and <=75%
2. Consortium members must be companies, uk or overseas (only uk members can participate in relief)

Question 5

What is the relief if ConCo has a loss (is surrendered upwards)

Answer 5

1. If ConCo makes a loss, uk consortium members can take up to their share of the losses (the losses available for relief are the same as for group relief)
2. The maximum relief = lower of:
   2.1 the consortium members % share of ConCo loss
   2.2 the consortium members TTP
3. Any claim between 0-maximum is allowed - can choose how much

Question 6

Relief is consortium member has a loss (surrender downwards)

Answer 6

1. If the consortium member makes a loss, it can surrender its loss to use against its share of ConCo TTP
2. Maximum relief, lower of;
   2.1 the consortium members % share of ConCo TTP
   2.2 the consortium members loss
3. Any claim can be between 0-max , can choose how much

Question 7

Criteria for a gains group

Answer 7

Exists if there are >=75% links (direct) between 2 or more companies and the holding company has >=50% (indirect) of any subsidiaries

A company cannot be a member of more than one capital gains group (unlike for group relief)

Non uk resident companies cannot benefit from gains group but can link uk companies in gains group

Question 8

How are assets transferred in a gains group

Answer 8

They are transferred at NGNL, not an option but a rule

Base cost for transferee=og cost + index allowance to the transfer date

Question 9

How are capital gains/losses transferred in a gains group?

Answer 9

Two memebers of a gains group (A and B) can elect that all or any part of the current period chargeable gains or current period capital loss can be transferred between them

Question 10

How is group ROR transferred for gains group

Answer 10

• A’s gain can be rolled over into a purchase by B if both are in the same gains group
• this also works for profits on disposals of IFA’s

Question 11

What are pre entry gains and losses for gains group

Answer 11

Pre entry losses cannot be used v gains transferred in from group companies or vs gains on the disposal of assets transferred in from other group companies

Pre entry gains cannot be used against losses transferred in from group companies

Question 12

What is a. De grouping charge

Answer 12

A de grouping charge applies if both of the following conditions are met:
1. A company leaves a gains group<=6 years of receiving an asset in a NGNL transfer, AND
2. Still owns the asset at the date it leaves the group

The de grouping charge equals the gain that would have arisen if the asset was sold to a third party at MV on the date it leaves the group