CTM80540 - Consortia: group relief: amount of relief: claimant is consortium member

ICTA88/S403C (2)

The amount of relief which a member of a consortium may claim against its profits for the overlapping period ( CTM80225) from a company owned by the consortium is limited to the relevant fraction of the loss or other amount available for relief for that period.

See the example at CTM80670.

The relevant fraction is the lowest of the following three percentages:

• the percentage holding of the ordinary share capital of the surrendering company beneficially owned by the member,
• the member's percentage entitlement to profits available for distribution by the surrendering company to its equity holders,
• the member's percentage entitlement to assets available for distribution by the surrendering company to its equity holders on a notional winding-up.

The detailed rules on these three percentages are in ICTA88/SCH18. They apply as in CTM81000 onwards, but read any reference to:

• 'parent company' as a reference to 'consortium member', and
• 'subsidiary company' as a reference to ‘company owned by the consortium'.

The percentages are based on entitlement in the overlapping period ( CTM80225) of the consortium member and the surrendering company. Where any of the percentages has varied in the overlapping period, the average percentage is taken. The average has to be weighted for time. For example:

• nine months at 60% (9/12 x 60% = 45%), and
• three months at 40% (3/12 x 40% = 10%),

gives an average of 55%.

Because the lowest of three percentage figures is taken for each member, the application of the above rules means that the total of all the members' relevant fractions will not necessarily add up to 100%. The difference between the aggregate percentage and 100% is not available for consortium relief.

The fraction or percentage is calculated by reference to the total ordinary share capital. The fraction or percentage is not increased if some share capital of the company owned by the consortium is owned by non-consortium members.