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 CTIAA (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.