Where the transferring and recipient companies were not members of the same group throughout one of the relevant accounting periods, the capacity of the recipient company for that accounting period is:
When the parent company fails to make an allocation, an officer
of the Board may make one. If the parent company subsequently makes
an allocation, the officer’s allocation is treated as if it
had not been made.
A company is not entitled to set unrelieved surplus ACT
against its liability until the surplus shadow ACT of the other
group members has been allocated.
A parent company, P, with unrelieved surplus ACT of £50,000
has CT profits of £100,000 for the twelve month accounting
period ended 31.12.06. It pays a dividend of £250,000
generating shadow ACT of £50,000. The £20,000 capacity of
the accounting period is all used so the company cannot use any of
its unrelieved surplus ACT. The company now has surplus shadow ACT
of £30,000. No unrelieved surplus ACT was used in any
accounting period of the company ended in the 24 month period
leading up to 31.12.06. The surplus shadow ACT must be allocated to
subsidiary companies before any is carried forward.
P has three subsidiaries, X, Y & Z. The subsidiary
companies have the same accounting periods as the parent but Z did
not become a member of the group until 1.07.06.
X has CT profits of £12,000, Y has CT profits of
£20,000, Z has CT profits of £100,000.
The surplus shadow ACT is allocated up to the maximum
capacity as follows:
X - 20% x £12,000 = £2,400.
Y - 20% x £20,000 = £4,000.
Z - 20% x £50,000 (50% of £100,000) = £10,000.
It is also necessary to look at the capacity of other
accounting periods ending in the 24 months to 31.12.06.
X has no capacity but Y has capacity to absorb a further
£2,000. The total allocated is £18,400 so P must carry
£11,600 forward.
