Corporation Tax Act 2010 Explanatory Notes

Introduction

Part 5: Group relief

Chapter 4: Claims for group relief

Section 143: Condition 1: surrendering company owned by consortium

553.This section is the basic rule about relief surrendered by a company to a member of the consortium that owns it. It is based on section 403C of ICTA.

554.Subsection (1) ties the section to consortium condition 1: that is, a case that does not involve a link company. Cases involving link companies are dealt with in sections 145 and 146.

555.Subsection (2) restricts the relief by reference to the consortium member’s interest in the surrendering company.

556.Subsection (3) sets out what that interest is. Usually it is the proportion represented by the consortium member’s shareholding in the surrendering company. But if that shareholding entitles the consortium member to a lower proportion of the surrendering company’s profits or assets the lower proportion is used.

557.Subsection (4) deals with the case where the consortium member’s interest in the surrendering company varies in the overlapping period (see section 142). In that case an average is taken.

558.Subsection (5) deals with the case where a trading company (T) is indirectly owned by a consortium through a holding company (H) (see section 185). In that case the various proportions referred to in the section are calculated by reference to the consortium member’s (M1’s) interest in H.