Corporation Tax Act 2010

Limitations on group relief if claim based on consortium condition 1, 2 or 3 U.K.

143 Condition 1: surrendering company owned by consortium U.K.

(1) This section applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 1, and

(b) it is the surrendering company that is owned by the consortium.

(2) The group relief to be given on the claim is limited to the ownership proportion of the surrenderable amount for the overlapping period (see section 139(2) to determine the surrenderable amount for the overlapping period).

(3) The ownership proportion is the same as the lowest of the following proportions—

(a) the proportion of the ordinary share capital of the surrendering company that is beneficially owned by the claimant company,

(b) the proportion of any profits available for distribution to equity holders of the surrendering company to which the claimant company is beneficially entitled (see Chapter 6), F1 ...

(c) the proportion of any assets of the surrendering company available for distribution to such equity holders on a winding up to which the claimant company would be beneficially entitled (see Chapter 6) [F2 , and

(d) the proportion of the voting power in the surrendering company that is directly possessed by the claimant company.]

(4) For the purposes of subsection (3)—

(a) the proportions mentioned in [F3 paragraphs (a) to (d)] of that subsection are those prevailing during the overlapping period, and

(b) if any of those proportions changes during that period, use the average of that proportion during that period.

(5) If the surrendering company is owned by the consortium as a result of section 153(3) (consortiums involving holding companies), references in subsection (3) to the surrendering company are to be read as references to the holding company in question.

(6) In this section “the overlapping period” is to be read in accordance with section 142.

Textual Amendments

F1 Word in s. 143(3)(b) omitted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by virtue of Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 7(2)(a)

F2 S. 143(3)(d) and word inserted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 7(2)(b)

F3 Words in s. 143(4)(a) substituted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 7(3)

144 Condition 1: claimant company owned by consortium U.K.

(1) This section applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 1, and

(b) it is the claimant company that is owned by the consortium.

(2) The group relief to be given on the claim is limited to the ownership proportion of the claimant company's [F4 available total profits] of the overlapping period (see section 140(2) to determine the [F4 available total profits] of the overlapping period).

(3) The ownership proportion is the same as the lowest of the following proportions—

(a) the proportion of the ordinary share capital of the claimant company that is beneficially owned by the surrendering company,

(b) the proportion of any profits available for distribution to equity holders of the claimant company to which the surrendering company is beneficially entitled (see Chapter 6), F5 ...

(c) the proportion of any assets of the claimant company available for distribution to such equity holders on a winding up to which the surrendering company would be beneficially entitled (see Chapter 6) [F6 , and

(d) the proportion of the voting power in the claimant company that is directly possessed by the surrendering company.]

(4) For the purposes of subsection (3)—

(a) the proportions mentioned in [F7 paragraphs (a) to (d)] of that subsection are those prevailing during the overlapping period, and

(b) if any of those proportions changes during that period, use the average of that proportion during that period.

(5) If the claimant company is owned by the consortium as a result of section 153(3) (consortiums involving holding companies), references in subsection (3) to the claimant company are to be read as references to the holding company in question.

(6) In this section “the overlapping period” is to be read in accordance with section 142.

Textual Amendments

F4 Words in s. 144(2) substituted (with effect in accordance with art. 1(3) of the amending S.I.) by The Tax Law Rewrite Acts (Amendment) Order 2013 (S.I. 2013/463), arts. 1(2), 10

F5 Word in s. 144(3)(b) omitted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by virtue of Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 8(2)(a)

F6 S. 144(3)(d) and word inserted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 8(2)(b)

F7 Words in s. 144(4)(a) substituted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 8(3)

145 Conditions 2 and 3: limitations in sections 143 and 144 U.K.

(1) This section applies if the claimant company makes a claim for group relief based on consortium condition 2 or consortium condition 3.

(2) If the claim is based on consortium condition 2, the limitation on group relief in section 143(2) applies in relation to the claim, but for this purpose references in section 143(3) to the claimant company are to be read as references to the link company.

(3) If the claim is based on consortium condition 3, the limitation on group relief in section 144(2) applies in relation to the claim, but for this purpose references in section 144(3) to the surrendering company are to be read as references to the link company.

146 Conditions 2 and 3: companies in link company's group U.K.

(1) If the claimant company makes a claim for group relief based on consortium condition 2, the amount of group relief to be given on the claim is limited by subsections (2) and (3).

(2) There is a limit on the amount of group relief that can be given, in total, on consortium claims made by the link company and group companies in relation to the surrendering company's surrenderable amounts for the surrender period.

(3) That limit is the maximum amount of group relief that could be given to the link company in relation to those amounts on consortium claims—

(a) assuming that no consortium claims in relation to those amounts were made by group companies based on consortium condition 2, F8 ...

[F9 (aa) assuming that the link company was UK related, and ]

(b) ignoring any lack of profits of the link company from which deductions could be made as mentioned in section 137(1).

(4) If the claimant company makes a claim for group relief based on consortium condition 3, the amount of group relief to be given on the claim is limited by subsections (5) to (7).

(5) There is a limit on the amount of group relief that can be given, in total, to the claimant company for the claim period on consortium claims made in relation to losses and other amounts surrendered by the link company and group companies.

(6) That limit is the same as the limit that, as a result of section 144(2), would apply for the purposes of a consortium claim made by the claimant company for the claim period in relation to losses or other amounts surrendered by the link company[F10 , assuming that the link company was UK related].

(7) In determining the limit that would apply as a result of section 144(2) it is to be assumed that the accounting period of the link company is the same as the accounting period of the claimant company.

(8) In this section—

• “consortium claim” means a claim for group relief based on consortium condition 1, consortium condition 2 or consortium condition 3, F11 ...

• “group company”, for the purpose of determining in accordance with this section a limitation on the amount of group relief to be given on a claim based on consortium condition 2 or consortium condition 3, means a company that is a member of the same group of companies as the link company (other than the link company itself)[F12 , and

• “UK related”, in relation to a company, has the meaning given by section 134.]

Textual Amendments

F8 Word in s. 146(3)(a) omitted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by virtue of Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 6(2)(a)

F9 S. 146(3)(aa) inserted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 6(2)(b)

F10 Words in s. 146(6) inserted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 6(3)

F11 Word in s. 146(8) omitted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by virtue of Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 6(4)(a)

F12 Words in s. 146(8) inserted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 6(4)(b)

[F13 146A Conditions 1 and 2: surrendering company not controlled by claimant company etc U.K.

(1) This section applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 1,

(b) it is the surrendering company that is owned by the consortium, and

(c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the claimant company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company.

(2) This section also applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 2, and

(b) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the link company, either alone or together with one or more other companies that are members of the consortium, from controlling the surrendering company.

(3) Arrangements are within this subsection if—

(a) the company, either alone or together with one or more other companies that are members of the consortium, would control the surrendering company, but for the existence of the arrangements, and

(b) the arrangements form part of a scheme the main purpose, or one of the main purposes, of which is to enable the claimant company to obtain a tax advantage under this Chapter.

(4) The group relief to be given on the claim is to be determined as if the surrenderable amount for the overlapping period were 50% of what it would be but for this section (see section 139(2) to determine the surrenderable amount for the overlapping period).

(5) In this section “ the overlapping period ” is to be read in accordance with section 142.

(6) Section 1139 (“tax advantage”) applies for the purposes of this section.

Textual Amendments

F13 Ss. 146A, 146B inserted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 9

146B Conditions 1 and 3: claimant company not controlled by surrendering company etc U.K.

(1) This section applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 1,

(b) it is the claimant company that is owned by the consortium, and

(c) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the surrendering company, either alone or together with one or more other companies that are members of the consortium, from controlling the claimant company.

(2) This section also applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 3, and

(b) during any part of the overlapping period, arrangements within subsection (3) are in place which enable a person to prevent the link company, either alone or together with one or more other companies that are members of the consortium, from controlling the claimant company.

(3) Arrangements are within this subsection if—

(a) the company, either alone or together with one or more other companies that are members of the consortium, would control the claimant company, but for the existence of the arrangements, and

(b) the arrangements form part of a scheme the main purpose, or one of the main purposes, of which is to enable the claimant company to obtain a tax advantage under this Chapter.

(4) The group relief to be given on the claim is to be determined as if the claimant company's total profits for the overlapping period were 50% of what they would be but for this section (see section 140(2) to determine the total profits for the overlapping period).

(5) In this section “ the overlapping period ” is to be read in accordance with section 142.

(6) Section 1139 (“tax advantage”) applies for the purposes of this section.]

Textual Amendments

F13 Ss. 146A, 146B inserted (with effect in accordance with Sch. 6 para. 10 of the amending Act) by Finance (No. 3) Act 2010 (c. 33), Sch. 6 para. 9

147 Conditions 1 and 2: surrenderable amounts including trading loss U.K.

(1) This section applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 1,

(b) it is the surrendering company that is owned by the consortium,

(c) the surrendering company's surrenderable amounts for the surrender period include a loss within section 99(1)(a), and

(d) the surrendering company has profits (of any description) of that period from which the loss could be deducted under section 37.

(2) This section also applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 2,

(b) the surrendering company's surrenderable amounts for the surrender period include a loss within section 99(1)(a), and

(c) the surrendering company has profits (of any description) of that period from which the loss could be deducted under section 37.

(3) The amount of group relief to be given on the claim is to be determined on the assumption that—

(a) the surrendering company makes a claim under section 37 in relation to the loss mentioned in subsection (1)(c) or (2)(b), and

(b) relief under that section is to be given in relation to the loss before the group relief is given.

(4) If section 148 also applies in relation to the claim for group relief, in giving effect to subsection (3) of this section the surrenderable amounts for the purposes of subsections (3) and (4) of that section are to be reduced by the amount of relief to be given on the surrendering company's claim as mentioned in subsection (3)(b) of this section.

148 Conditions 1 and 2: surrendering company in group of companies U.K.

(1) This section applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 1,

(b) it is the surrendering company that is owned by the consortium, and

(c) the surrendering company is also a member of a group of companies.

(2) This section also applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 2, and

(b) the surrendering company is a member of a group of companies.

[F14 (3) In the case of the claim (“the current claim”) the surrendering company’s surrenderable amounts for the surrender period are to be treated as reduced (but not below nil) by the group’s potential relief.]

(5) The group's potential relief is the maximum amount of group relief that could be given if every claim that could be made based on the group condition in respect of the surrenderable amounts was in fact made (and for this purpose it is to be assumed that the maximum possible claim is made in each case).

(6) Before determining the maximum amount of potential group relief under subsection (5), take account of any claim made before the current claim that—

(a) is a claim for group relief based on the group condition, and

(b) is in relation to losses or other amounts surrendered by a member of the same group of companies as the surrendering company (other than the surrendering company itself).

Textual Amendments

F14 S. 148(3) substituted for s. 148(3)(4) (with effect in accordance with art. 1(3) of the amending S.I.) by The Tax Law Rewrite Acts (Amendment) Order 2013 (S.I. 2013/463), arts. 1(2), 11

149 Conditions 1 and 3: claimant company in group of companies U.K.

(1) This section applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 1,

(b) it is the claimant company that is owned by the consortium, and

(c) the claimant company is also a member of a group of companies.

(2) This section also applies if—

(a) the claimant company makes a claim for group relief based on consortium condition 3, and

(b) the claimant company is a member of a group of companies.

[F15 (3) In the case of the claim (“the current claim”) the claimant company’s available total profits of the claim period are to be treated as reduced (but not below nil) by the group’s potential relief.]

(5) The group's potential relief is the maximum amount of group relief that could be claimed by the claimant company for the claim period on claims based on the group condition.

(6) Before determining the maximum amount of potential group relief under subsection (5), take account of any claim made before the current claim that—

(a) is a claim for group relief based on the group condition made by another member of the same group of companies as the claimant company, and

(b) is in relation to losses or other amounts surrendered by a company that is also a member of that group.

Textual Amendments

F15 S. 149(3) substituted for s. 149(3)(4) (with effect in accordance with art. 1(3) of the amending S.I.) by The Tax Law Rewrite Acts (Amendment) Order 2013 (S.I. 2013/463), arts. 1(2), 12