C1Part XI Company Taxation
C2Chapter I Main Provisions
See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), ss. 21(2), 59— Pt. XI Ch. 1 to have effect to the exclusion of those sections (persons chargeable under Schs. A and D).
C3C4Groups of companies
See Development Land Tax Act 1976 (c. 24), s. 47(2)— s. 272 (with omission of subss. (1)(a) and (2)) and the following sections of Chapter II to have effect in relation to the Development of Land Tax Act 1976. The said Act of 1976 repealed by Finance Act 1985 (c. 54), ss. 93, 98(6), Sch. 27 Pt. X with effect from March 19th 1985.
See Finance Act 1984— for the purposes of ss. 272–281 a trustee savings bank, as defined in s. 54(1) of the Trustee Savings Banks Act 1981 (c. 65), shall be deemed to be a body corporate with effect from November 21st 1982.
C6C7C8272 Groups of companies: definitions. C5
1
F2Except as otherwise provided, for the purposes of this and the following sections of this Chapter—
C9C10a
references to a company, F3subject to section 280(7) below, apply only to a company, as that expression is limited by subsection (2) below, which is resident in the United Kingdom;
F4b
subsections (1A) and (1D) below apply to determine whether companies form a group and, where they do, which is the principal company of the group;
d
in applying the definition of “75 per cent. subsidiary” in section F5838 of the Taxes Act 1988 any share capital of a registered industrial and provident society shall be treated as ordinary share capital; and
F61A
Subject to subsections (1B) to (1D) below—
a
a company (referred to below in this Chapter as the “principal company of the group”) and all its 75 per cent. subsidiaries form a group and, if any of those subsidiaries have 75 per cent. subsidiaries, the group includes them and their 75 per cent. subsidiaries, and so on, but
b
a group does not include any company (other than the principal company of the group) that is not an effective 51 per cent. subsidiary of the principal company of the group.
1B
A company cannot be the principal company of a group if it is itself a 75 per cent. subsidiary of another company.
1C
Where a company (“the subsidiary") is a 75 per cent. subsidiary of another company but those companies are prevented from being members of the same group by subsection (1A)(b) above, the subsidiary may, where the requirements of subsection (1A) above are satisfied, itself be the principal company of another group notwithstanding subsection (1B) above unless this subsection enables a further company to be the principal company of a group of which the subsidiary would be a member.
1D
A company cannot be a member of more than one group; but where, apart from this subsection, a company would be a member of two or more groups (the principal company of each group being referred to below as the “head of a group"), it is a member only of that group, if any, of which it would be a member under one of the following tests (applying earlier tests in preference to later tests)—
a
it is a member of the group it would be a member of if, in applying subsection (1A)(b) above, there were left out of account any amount to which a head of a group is or would be beneficially entitled of any profits available for distribution to equity holders of a head of another group or of any assets of a head of another group available for distribution to its equity holders on a winding-up,
b
it is a member of the group the head of which is beneficially entitled to a percentage of profits available for distribution to equity holders of the company that is greater than the percentage of those profits to which any other head of a group is so entitled,
c
it is a member of the group the head of which would be beneficially entitled to a percentage of any assets of the company available for distribution to its equity holders on a winding-up that is greater than the percentage of those assets to which any other head of a group would be so entitled,
d
it is a member of the group the head of which owns directly or indirectly a percentage of the company’s ordinary share capital that is greater than the percentage of that capital owned directly or indirectly by any other head of a group (interpreting this paragraph as if it were included in section 838(1)(a) of the Taxes Act 1988).
1E
For the purposes referred to in subsection (1) above, a company (“the subsidiary") is an effective 51 per cent. subsidiary of another company (“the parent") at any time if and only if—
a
the parent is beneficially entitled to more than 50 per cent. of any profits available for distribution to equity holders of the subsidiary; and
b
the parent would be beneficially entitled to more than 50 per cent. of any assets of the subsidiary available for distribution to its equity holders on a winding-up.
1F
Schedule 18 to the Taxes Act 1988 (group relief: equity holders and profits or assets available for distribution) shall apply for the purposes of subsections (1D) and (1E) above as if the references to subsection (7), or subsections (7) to (9), of section 413 of that Act were references to subsections (1D) and (1E) above and as if, in paragraph 1(4), the words from “but" to the end F7paragraphs 5(3) and 7(1)(b) were omitted.
C9C102
For the purposes referred to in subsection (1) above references to a company apply only to—
a
a company within the meaning of the F8Companies Act 1985 or the corresponding enactment in Northern Ireland, and
b
a company which is constituted under any other Act or a Royal Charter or letters patent or (although resident in the United Kingdom) is formed under the law of a country or territory outside the United Kingdom, and
c
C13d
a trustee savings bank as defined in section 54(1) of the Trustee Savings Banks Act 1981; F11and
e
a building society within the meaning of the Building Societies Act 1986.
3
For the purposes referred to in subsection (1) above a group remains the same group so long as the same company remains the principal company of the group, and if at any time the principal company of a group becomes a F12member of another group, the first group and the other group shall be regarded as the same, and the question whether or not a company has ceased to be a member of a group shall be determined accordingly.
4
C145
The following sections of this Chapter, except in so far as they relate to recovery of tax, shall also have effect in relation to bodies from time to time established by or under any enactment for the carrying on of any industry or part of an industry, or of any undertaking, under national ownership or control as if they were companies within the meaning of those sections, and as if any such bodies charged with related functions (and in particular the Boards and Holding Company established under the M1Transport Act 1962 and the new authorities within the meaning of the M2Transport Act 1968 established under that Act of 1968) and subsidiaries of any of them formed a group, and as if also any two or more such bodies charged at different times with the same or related functions were members of a group:
Provided that this subsection shall have effect subject to any enactment by virtue of which property, rights, liabilities or activities of one such body fall to be treated for corporation tax as those of another, including in particular any such enactment in Chapter F9VI of Part XII of the Taxes Act 1988.
6
The following sections of this Chapter, except in so far as they relate to recovery of tax, shall also have effect in relation to F14the London Transport Executive and the Executive for a designate area within the meaning of section 9(1) of the M3Transport Act 1968 as if F15that Executive were a company within the meaning of those sections.
See Income and Corporation Taxes Act 1988 (c. 1, SIF:63:1), ss. 114–116— special rules for partnerships involving companies.