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Question		Answer
sRelated 51% group companies: 2cz \| d e f i n i t o n graphics available at p. 30 start learning		One company directly or indirectly owns more than 50% of another, \| or both are 51% subsidiaries of a third company.
Group relief (GR) group: 4cz \| d e f i n i t i o n start learning		A parent company and all its direct\| and indirect 75% subsidiaries.\| The definition of 75% subsidiary is extended for GR purposes only.\| In addition to owing 75% of shares, the parent must also be entitled to received 75% profits and assets on WINDING UP. 75%-75%-GRonly-W
Capital gains (or loss) group: 3cz \| d e f i n i t i o n start learning		A parent company and its 75% subsidiaries, \| provided that principal member has more than 50% of effective interest in subsidiary. \| A 75% subsidiary of a principal member cannot be a principal member itself.* 75% - 50% - one *that is a company can ONLY be a member of ONE gains group.
75% subsidiary: 4cz \| d e f i n i t i o n start learning		One company owns at least 75% of SC of another. \| or Both are 75% subsidiaries of a third company. \| Includes direct and indirect holdings. \| Including overseas companies.
Consortium owned company: 4cz \| d e f i n i t i o n graphics available at p. 30 start learning		At least 75% ordinary SC owned by companies, \| each owing at least 5%, \| and each member is entitled to at least 5% of PROFITS and net assets. \| Excludes a company that is 75% subsidiary of another. 75%-5%-5%-75% SC - share capital
Related 51% group companies include: 2 start learning		Overseas resident companies too. \| Companies leaving group.
Related 51% group companies exclude: 3 start learning		Dormant companies (if dormant for the whole period). \| Non-trading holding companies. \| Companies joining the group. DNJ
The number of related companies is based on the position at ... accounting period, hence the treatment of companies joining and leaving in the period. start learning		at the END of the previous accounting period
DIVIDE the THRESHOLD by the number of related companies to determine whether... effect of related 51% group companies start learning		whether instalments are necessary.
Dividends from related UK and overseas companies are ... in augmented profits. effect of related 51% group companies start learning		not included
AIA and 51% group. effect of related 51% group companies Annual Investment Allowance start learning		Only one AIA is allocated between group companies. Annual Investment Allowance
VAT ... available. effect of related 51% group companies start learning		VAT group registration
Group payment arrangement are available if... effect of related 51% group companies start learning		at least one company pays by quarterly instalments.
Group relief (GR) transfers losses between ...... start learning		any member of a GR group.
GR and overseas companies. 2cz start learning		Group includes overseas companies \| but the relief can generally only be claimed by UK resident companies.
A company can surrender any amount of ... year losses. GR rules start learning		of current year
GR. A company can surrender any amount of current year of: 2 start learning		Trading loss, \| Non-trading loan relationships (NTLR) debits.
GR. A company can surrender a trading loss and debits on trading loan relationship PLUS excess of: 3 debit - debet start learning		QCD relief. \| UK property losses. \| Expenses of management. QUE netu QCD - qualifying charitable donations.
GR. A company can surrender brought forward: # start learning		NTLR debits. \| Expenses of management. \| Trading losses. \| UK property losses. que NETU NTLR - non-trading loan relationship
The surrendering company can only surrender to the extent it... start learning		it cannot use the above against its own total profits.
GR. Maximum claim formula: start learning		TTP less Current year losses TTP is after deduction of loses brought forward and QCD. \| The company's own losses are taken into account in computing the maximum claim, but need not actually be claimed before GR.
GR. Non-coterminous APs: start learning		GR restricted to common accounting period (profits deemed to accrue evenly).
GR. Companies joining group: 2cz start learning		GR available for losses arising whilst in the group. \| Losses arising in a subsidiary before it joins the group are not available for group relief for 5 year after joining.
GR. Companies leaving group, relief is only available for losses arising whilst ..., but... 2cz start learning		whilst in the group, \| but no GR once arrangements for sale are in place.
Due date group relief claim: start learning		12 months after the claimant company's filing date for the A.P. covered by the claim (that is usually 2 years after the end of the A.P.).
Payment for group relief: 2cz start learning		The claimant company may pay the surrounding companies for the loss. Any such payment for the group relief is ignored in both companies' CT computations \| as long as the amount of payment is no more than surrendered amount itself.
Consortium relief and oversees companies: start learning		Consortium members can be resident anywhere in the world but only a UK resident consortium member can CLAIM or SURRENDER losses. Overseas companies can help to meet the definition.
The maximum consortium loss relief available for surrender is: 3cz start learning		The lower of\| the RESULTS of the consortium member\| and the consortium members’ % ENTITLEMENT to the RESULTS of the consortium company. TPP/loss Exam focus: always consider whether or not any of the companies in the question form a consortium.
Capital gains group. Transfer of assets automatically take place at no gain/no loss regardless of the... start learning		regardless of the price paid.
Capital gains group. Transfer of assets. Transferee company takes over asset at cost plus... start learning		plus indexation to date of transfer.
Capital gains group; transfer of assets. Degrouping charge is where transferee company leaves the group still owning the asset, within ... years of the... start learning		6 years \| of the no gain/no loss transfer.
Capital gains group. Degrouping charge is calculated as gain have arisen, using ... value as proceeds, at date of no gain/no loss transfer. start learning		market value
Capital gains group. Degrouping charge is added to... 2cz start learning		to the CONSIDERATION \| received by the VENDOR COMPANY selling the shares in the company leaving the group.
Degrouping charge. This additional consideration is ... to be taxable. start learning		unlikely to be taxable (as the company selling the shares is likely to benefit from SSE) As the company selling the shares is likely to benefit from the substantial shareholding exemption (SSE). In respect of any gain or loss on disposal of the shares, including the degrouping charge.
Group ROR is ... for a degrouping gain. rollover relief start learning		not available
Capital gains group. Reallocation of gains. A joint election can be made to reallocate chargeable gains or allowable losses when an asset is sold... start learning		outside the group. Key point: Remember that only current year chargeable gains or allowable losses can be transferred (not brought forward capital losses).
Capital gains group. Reallocation of gains. The joint election enables: start learning		Group chargeable gains and allowable capital losses to be offset thus maximising the use of capital losses.
Capital gains group. Rollover relief (replacement of business assets). For ROR purposes, all companies within the group are treated as... start learning		as carrying on a single trade. Gain in one company can be rolled into the acquisition by another group company.
Capital gains group. Pre-entry capital losses can only be used against: 2 \| t r i c k y start learning		Gains on OWN ASSETS held at date of joining group. \| Gains on new assets acquired from outside group for USE IN BUSINESS. Pre-entry capital losses cannot be used against gains of other group companies.
Capital gains group. Restrictions on trading losses CARRIED FORWARD. Any trading loss that arose before it joined the group cannot be set against this gain if the company: 2 start learning		RECEIVES a gain from the new group, \| or MAKES a gain on an asset transferred from the new group within 5 years of the date of changing owners (that is joining the group).
Capital gains group. Transfer of INTANGIBLES. Similar rules as in case of losses, that is tax neutral. Degrouping charge if transferee company leaves the group within ... years. start learning		within 6 years.
Capital gains group. Transfer of intangibles. Degrouping charge ... be allocated to another group member. start learning		can be allocated
Capital gains group and transfer of intangibles. When applying SSE always remember about... start learning		ignoring the degrouping charge! If SSE applies to the share disposal, there will be no a degrouping charge. Application of SSE is automatic! The asset will remain at its Tax written down value (TWDV) and tax relief will continue as it would if the company had no left the group.
Capital gains group. Assets subject to stamp duty and SDLT ... transferred between group members. start learning		can be transferred (as an exempt transfer).
Capital gains group. Stamp taxes. If the transferee company leaves the group within ... years the duty is payable. start learning		3 years.
Group questions. Alternative to GR: start learning		carrying back (after current period relief), as this can generate a repayment. Also try to reduce the TPP of companies exceeding the threshold. This will be beneficial to the group cash flow as CT instalments will no longer be required.
Group reliefs stop when ... are in place. start learning		when sales arrangements are in place. If mid-year, time apportion needed.
Sale of trade assets within 75% group. Trade losses can be... 2 start learning		can be transferred with the trade; \| can be used against future total profits.
Sale of trade assets within 75% group. Capital allowances. 3 start learning		Assets will be transferred at TWDV. \| No BC/BA for transferor. \| No FYA or AIA for transferee. BA/ - balancing allowance/charge \| FYA - First-Year Allowance Structures and buildings allowances (SBAs) for transferee based on original cost.
Sale of trade assets within 75% group: start learning		Assets pass as usual at no gain/no loss.
Sale of trade assets within 75% group - if NOT capital gains group treatment: start learning		Capital gains or losses will arise on chargeable assets sold.
Transfer pricing. The advantages company must... \| The other company can... 2 start learning		must increase its taxable profits to reflect an arm's length price. \| can reduce its taxable profits by a corresponding amount if it is UK-resident. Transfer pricing applies where transactions between group companies, which have not taken place at an arms length price, result in a tax advantage (decreased profits, increased losses to a UK company).
Transfer pricing. Special rules apply where the SENDING COMPANIES involved are large (ALWAYS) or medium sized under limited circumstances.* Rules apply if: start learning		Small or medium company is overseas company in non-qualifying territory (no DTR agreement).*
Transfer pricing. Special rules do NOT apply if: 2 start learning		S_M sends to UK S_M. \| or S_M sends to overseas company in qualifying territory (DTR agreement exists). S_M - small or medium
VAT group registration membership conditions: 3 start learning		Voluntary possibility. \| By any UK company under COMMON CONTROL. \| Non-corporate entities may form a VAT group if they are the controller of a group of companies and have a UK trade.* VCN *sole trader meets the definition, but simple individual does not.
Consequences of VAT Group registration. # start learning		Only one VAT return. \| Representative member responsible for accounting. \| AAS and FRS not available. \| CAS applied to whole group. \| Joint and several group VAT liability for all members. \| Intra-group sales without VAT. ORACJI CAS - cash accounting scheme; AAS - Annual accounting scheme. \| FRS - Flat rate scheme.
When considering to explain whether or not a company should be included in a VAT group special attention is required for: 2 start learning		Company making zero-rated supplies (exclude if in monthly repayment position to maintain CF advantage). \| Companies making exempt supplies (inclusion in group will make the group partially exempt). This could increase the total input tax recovered by the group, e.g. if the results of the group as a whole satisfy the partial exemption de minimis limits. But it could also result in a reduction in the total input tax recovered - consideration needed.
Company has 16 months period of account. What are due dates for submission of returns? 2 start learning		12 months after the end of the long period of account for BOTH returns (for the first 12 months AP and the balance of the time). \| Note that there are two separate payment days (9 months and 1 day after each end). The period of account cannot be more than 18 months long (unless the company is in administration). \| An accounting period (AP) for C.T. purposes can never exceed 12 months. Therefore accounts for long period must be split.
What is a tax treatment when company sells a subsidiary with a loss or gain? start learning		The sale will be covered by SSE, accordingly there will be no relief for gain on the disposal of the shares. Capital losses are disallowable. If hold at least 10% of shareholding for continuous 12 months \|within last 6 years \| a subsidiary i a TRADING company. \| If conditions not met allowable loss or chargeable gain arise.
Pre-entry capital loss methods of utilisation: 2cz start learning		Pre-entry loss is restricted so it can only be offset against loss on disposal of assets owned before joining the group \| or bought subsequently from unconnected persons for use in its own business. Capital losses are more restricted than trading losses.
Large company spend £169,000 for RaD. Calculate the ATL credit: start learning		£21,970. 13% - 'above the line' credit
Large company spend £169,000 for RaD and has total taxable profits of £1,675,000. Calculate the total amount of C.T. saved by claiming RaD relief: start learning		£49,906 of C.T. saved in total. 21,970 ATL credit + 27,936 basic C.T. saving (19% of 147,030).
Advantages of acquisition of company by company owned by individual rather than by this individual personally: 4 start learning		Assets are transferred within a group take place on no gain no loss basis. \| Trading losses can be transferred. \| Capital gains can be transferred. _\| Land, buildings and fixed machinery used in business are qualifying assets for rollover relief purposes. NTCL
Disadvantages of acquisition of company by company owned by individual rather than by this individual personally: 2 start learning		C.T. instalment threshold is reduced. \| Only one AIA for the group. However it might one AIA anyway, if companies of individual share the same premises or operate in the same sector.
Amortisation of goodwill in C.T. context: start learning		Amortisation of goodwill disallowable for C.T. purposes. Any amortisation charged in the accounts must be added back for tax purposes.
Amortisation of patent acquired from capital gains group member C.T. treatment: start learning		Amortisation charge must based on original price paid, not the price of internal transfer. Amortisation of patent is allowable deduction for C.T. purposes.
Transfer pricing concern the ... companies. start learning		connected companies Companies are connected if: one company directly or indirectly participates in the management, control or capital of the other company \| or a third party directly or indirectly participates in the management, control or capital of both companies.
Transfer pricing in qualified territories context: start learning		When double tax treaty exist then transfer pricing rules do not apply. If there is no treaty, UK company can seek advance approval from HMRC in respect of any intra-group pricing arrangements, including the rate of interest to be charged on a loan.
The thin capitalisation rules aim: start learning		to stop UK companies from getting excessive tax relief on interest. It occurs usually because they received a loan from a related party that exceeds the loan an independent lender would be prepared to lend. The rules ensure that the excess is disallowed.
An overseas resident company ... transfer assets at no gain, no loss within a capital gains group. start learning		cannot the fact that overseas company is not a UK resident company means that the asset will no longer be within the charge to UK taxation.

02 - Groups - CT and VAT.

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