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 facts
M is a company owned by members of a consortium C (50%) and Z
(50%).
All companies make up accounts for the year to 31 December
2002. In that period:
M has incurred a trading loss of £10,000 and has chargeable gains of 5,000.
C has substantial profits.
Z has a loss.
Procedure
Were it not for ICTA88/S403ZA (3) (
CTM80570), C could claim its half share
(‘relevant fraction’
CTM80540) of M’s trading loss as
consortium relief, leaving the balance available for a claim under
ICTA88/S393A by M. So C would effectively obtain relief for the
whole of M’s (net) losses rather than for its 50% share.
Under the rules in ICTA88/S403ZA (3), for the purposes of
C’s consortium claim, M's losses are restricted by any claim
under ICTA88/S393A that could be made to set them off against total
profits.
C's consortium claim is thus limited to 50% x (£10,000 -
£5,000) = £2,500.
