In this example ICTA88/S410 (arrangement for transfer of company
to another group or consortium) and ICTA88/S413 (7) to (10)
(entitlement to profits and assets tests) do not apply.
Apportionments are on a time basis.
The consortium and group structure is as shown in the diagram
at
CTM80590.
Facts
CH is a holding company owned by members of a consortium L
(60%) and X (40%). CH holds 90% of the ordinary share capital of
CT1 a trading subsidiary. CT2 and CT3 are 100% trading subsidiaries
of CH.
L owns 75% of the shares in S2. The other 25% are not held by
any company in P’s group.
This part of the consortium and group structure has existed
for many years.
All the companies except S2 draw up accounts to 31 December.
For accounting periods to 31 December 2000:
S2 has losses of £19,000 for accounting period 12 months to
30 June 2001.
CT1 makes a consortium claim in respect of S2’s losses.
ICTA88/S405 (4) (
CTM80585) applies because there is the
potential for CT1 to make group claims in respect of CT2’s
and CT3’s losses. It could claim £6,000 in total,
£3,000 from each. So for the purposes of calculating the
amount of consortium relief CT1 can claim, its total profits are
£34,000 (£40,000 minus £6,000).
Procedure
The provisions about apportionment to overlapping periods
(ICTA88/S403A -
CTM80215) interact with those about
consortium shares (ICTA88/S403C -
CTM80545) and those about surrenders by
group members ICTA88/S406 -
CTM80560. A restriction is also needed
because the consortium company could claim make group claims from
fellow group companies (ICTA88/S405 - CTM80585).
The claim
CT1 can claim consortium relief from S2 because S2 is in the
same group as the link company L. ICTA88/S406 applies (
CTM80550).
The overlapping period (
CTM80225) is 6 months ended 31 December
2000.
S2’s surrenderable amount for the accounting period
ended 30 June 2001 is £19,000. Under ICTA88/S403A (3)(b) that
is not reduced by reference to ICTA88/S403C.
S2 has made no prior surrenders so its ‘unused part of
the surrenderable amount for the overlapping period’ (
CTM80235) is the same as its
‘surrenderable amount for the overlapping period’ (
CTM80230). It is:
| 6/12 | x | £19,000 | = | £9,500 |
CT1’s total profits for its accounting period to 31
December 2000 are £34,000 as above. However ICTA88/S403C (3)
(CTM80545) limits this to L’s share (‘relevant
fraction’ ICTA88/S406(6) - CTM80560) of CT1’s profits
for the accounting period.
This is:
| 60% x 90% = 54% | x | £34,000 | = | £18,360 |
So CT1’s ‘unrelieved part of the claimant’s total profits for the overlapping period (CTM80230) (which is also the same as its ‘total profits for the overlapping period’ as it has made no prior claims) is:
| 6/12 | x | £18,360 | = | £9,180 |
The amount that can be surrendered/claimed is the smaller of £9,500 and £9,180 = £9,180.
