Corporation Tax Act 2010

Introduction

Part 5: Group relief

Chapter 4: Claims for group relief

Section 133: Consortium conditions 2 and 3

499.This section extends the relief that is available to consortiums. It is based on sections 402 and 406 of ICTA.

500.The extension involves a company (“the link company”) that is a consortium member and is also a member of a group. There are special rules for companies in the same group as the company owned by a consortium in sections 148 and 149.

501.Subsection (1) allows relief to go “upwards” from a company (C) owned by a consortium to a company (P) that is in the same group as the link company (L).

502.Subsection (2) allows relief to go “downwards” from a company (P) that is in the same group as the link company (L) to a company (C) owned by the consortium.

503.Subsections (3) and (4) deny relief if the consortium relationship depends on shares that are held by a share-dealing company as circulating capital.

504.The rule in subsections (3) and (4) is not explicit in the source legislation. If shares in C are held by L as circulating capital, section 402(4) of ICTA prevents a consortium claim by L. Similarly, C may not claim L’s losses etc. It follows that when P steps into the shoes of L in accordance with section 406(2) or (5) of ICTA P may not claim C’s losses etc and C may not claim P’s losses etc.