Corporation Tax Act 2010

Introduction

Part 5: Group relief

Chapter 5: Subsidiaries, groups and consortiums

Section 154: Arrangements for transfer of member of group of companies etc

609.This section counteracts arrangements designed to obtain group relief. It is based on section 410 of ICTA.

610.It is possible to arrange for a loss-making company in a group to become temporarily a member of a second group while the economic reality is that it remains a member of the first group. The section operates as soon as arrangements are made for the ownership of the company to change.

611.Subsection (1) appliesthe section potentially to any case involving two companies in a group.

612.Subsection (2) denies group relief (by treating the companies as not members of the same group) if “arrangements” are in place.

613.Subsection (3) sets out the three “effects” which bring arrangements within the section. They all involve a change in the control of one of the companies or of a trade that it carries on.