CTM80195 - Groups: group relief: date of arrangements

ICTA88/S410 (1)

Section 410 (1) requires taking account of arrangements in existence at any time material to the claim. Following the decision in Shepherd v Law Land plc 63TC692, a group relationship which would otherwise exist is only broken while the arrangements are in existence. A group relationship is not broken, as had previously been thought, for the whole of any accounting period in which arrangements existed at any time.

Refer to CT&VAT (Technical) any cases where:

• the claimant company disputes whether arrangements are in existence,
• events occurring after determination of a claim suggest that there may have been an earlier arrangement (written or oral).

The apportionment rules of ICTA88/S403A ( CTM80210) apply where necessary, for example when arrangements:

• come into existence, so that the transferred company leaves the old group,
• are given effect to, so that the transferred company becomes a member of a new group, under its control.

Example

Company A owns all the ordinary share capital of Company B. Entitlements to profits and assets reflect ordinary share ownership. On 31 January 2002 Company A and Company C agree terms for the transfer of the shares in Company B to Company C, subject to contract. On 29 February 2002 Company A and Company B sign and complete an unconditional contract.

Arrangements come into existence on 31 January 2002, ICTA88/S410 (1)(b)(i) applies and Company A and Company B cease to be members of the same group after that date. An overlapping period (for ICTA88/S403A group relief purposes) comes to an end on 31 January 2002 ( CTM80225). Company C acquires beneficial ownership on 1 March 2002, following the date of contract. See J Sainsbury plc v O'Connor 64TC208 in relation to the meaning of beneficial ownership.