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PART XU.K. LOSS RELIEF AND GROUP RELIEF

CHAPTER IVU.K. GROUP RELIEF

Modifications etc. (not altering text)

C1 See—1988 s.434A—limitations on group relief for life assurance company.1989 s.102—surrender of company tax refund etc. within group (from a day to be appointed not earlier than 31March 1992).

C3Pt. 10 Ch. 4: The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), reg. 35 to be construed as one with this Chapter (6.4.2006) by virtue of regs. 1, 35(2) of that affecting S.I.

402 Surrender of relief between members of groups and consortia.U.K.

(1)M1Subject to and in accordance with this Chapter and section 492(8), relief for trading losses and other amounts eligible for relief from corporation tax may, in the cases set out in subsections (2) and (3) below, be surrendered by a company (“the surrendering company”) and, on the making of a claim by another company (“the claimant company”) may be allowed to the claimant company by way of a relief from corporation tax called “group relief”.

(2)Group relief shall be available in a case where the surrendering company and the claimant company are both members of the same group.

(3)M2Group relief shall also be available in the case of a surrendering company and a claimant company either where one of them is a member of a consortium and the other is—

(a)a trading company which is owned by the consortium and which is not a 75 per cent. subsidiary of any company; or

(b)a trading company—

(i)which is a 90 per cent. subsidiary of a holding company which is owned by the consortium; and

(ii)which is not a 75 per cent. subsidiary of a company other than the holding company; or

(c)a holding company which is owned by the consortium and which is not a 75 per cent. subsidiary of any company;

or, in accordance with section 406, where one of them is a member of a group of companies and the other is owned by a consortium and another company is a member of both the group and the consortium.

[F1(3A)Group relief is not available unless the following condition is satisfied in the case of both the surrendering company and the claimant company.

(3B)The condition is that the company is resident in the United Kingdom or is a non-resident company carrying on a trade in the United Kingdom through a [F2permanent establishment].]

(4)A consortium claim shall not be made F3. . . if a profit on a sale of the share capital of the other company or its holding company which the member owns would be treated as a trading receipt of that member.

(5)M3Subject to the provisions of this Chapter, two or more claimant companies may make claims relating to the same surrendering company, and to the same accounting period of that surrendering company.

(6)A payment for group relief—

(a)shall not be taken into account in computing profits or losses of either company for corporation tax purposes, and

(b)shall not for any of the purposes of the Corporation Tax Acts be regarded as a distribution or a charge on income;

and in this subsection “a payment for group relief” means a payment made by the claimant company to the surrendering company in pursuance of an agreement between them as respects an amount surrendered by way of group relief, being a payment not exceeding that amount.

Textual Amendments

F1S. 402(3A)(3B) inserted (with effect in accordance with Sch. 27 para. 6(1)(4) of the amending Act) by Finance Act 2000 (c. 17), Sch. 27 para. 1

F2Words in s. 402(3B) substituted (with effect in accordance with s. 153(4) of the amending Act) by Finance Act 2003 (c. 14), s. 153(1)(a)

F3Words in s. 402(4) repealed (retrospectively) by Finance Act 2000 (c. 17), s. 100(3)(a)(5), Sch. 40 Pt. 2(11), Note 2

Modifications etc. (not altering text)

C4S. 402(1)(2)(5)(6) applied (with modifications) (31.3.2001 with effect in accordance with reg. 1(2) of the affecting Regulations) by The Double Taxation Relief (Surrender of Relievable Tax Within a Group) Regulations 2001 (S.I. 2001/1163), reg. 10

C6S. 402(3) restricted (with effect in accordance with s. 69(1) of the restricting Act) by Finance Act 2000 (c. 17), Sch. 20 para. 22 (with Sch. 20 para. 26)

Marginal Citations

M1Source—1970 s.258(1)

M2Source—1970 s.258(2); 1981 s.40(2); 1985 Sch.9 5, 6

M3Source—1970 s.258(3), (4)