Tax groupings

It is common for corporate entities to operate within a group, meaning, broadly, several companies under common ownership.

In many ways, a group of companies operates as a single economic unit. The basic UK corporation tax rules operate on a company by company basis and could in some circumstances result in unfair tax consequences for companies within a group. As a result there are a number of UK tax rules which aim to eliminate or minimise such unfair tax treatments by recognising the existence of groups of companies.

It will often be straightforward to identify a group, as typically there will be a chain, or a pyramid, of companies each of which is 100% owned by the company above it in the structure. In more complex situations, detailed rules are required to determine which companies will be regarded as grouped with one another. Different areas of the tax legislation contain different versions of such rules.

As a broad generalisation, group membership tends to be available to companies whether they are UK resident or not, but most of the benefits of membership (such as the ability to surrender tax