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.
The consortium and group structure is as shown in the diagram
at
CTM80590,
except that CH owns 75%, not 90%+, of CT3’s
ordinary share capital, and CT3 also has a 75% trading subsidiary
CT4.
Facts
CH is a company owned by members of a consortium L (60%) and
X (40%) throughout the year to 31 December 2002. Its business is
wholly or mainly holding shares in its 90% subsidiaries, CT1 and
CT2 (
CTM80535).
CT1, CT2, CT3 and CT4 are trading companies. CT1 and CT2 are
100% subsidiaries of CH. CT3 is a 75% subsidiary of CH. CT4 is a
75% subsidiary of CT1.
All companies make up accounts for twelve months to 31
December 2002. In that period:
CH has excess management expenses of £10,000.
CT1 has a trading loss of £50,000.
CT2 has a trading loss of £40,000.
CT3 has a profit of £30,000.
CT4 has a profit of £20,000.
L has profits of £80,000.
X has profits of £90,000.
Procedure
The amounts that can be surrendered as consortium relief must
be restricted by the amount of any potential group claims by
companies grouped with the group/consortium companies (
CTM80580), notwithstanding that not all
of those companies are themselves group/consortium companies.
The claims
CH, CT1, CT2, CT3 and CT4 compose a group of companies.
However only CH, CT1 and CT2 are companies owned by the consortium
(
CTM80530). CT3 and CT4 are not, because
they are not 90% trading subsidiaries of CH.
If no group claims are made, neither L nor X can make
consortium claims. This is because CT3 and CT4 between them could
make group claims and exhaust the available relief of each
(individually) of CH, CT1 and CT2. This is because CT3 and CT4
together could absorb relief of £50,000 (£30,000 +
£20,000). £50,000 is greater than (or equal to) each
of:
However if CT3 and CT4 each claims maximum group relief from CT1 (in total £50,000), L and X could each claim relief in respect of their 60% and 40% respective shares (‘relevant fraction’ CTM80540) of CH’s excess management expenses of £10,000 and CT2’s £40,000 loss.
