Group relief

Group relief

What is group relief?

Group relief is a mechanism that allows members of a corporation tax loss relief group (for which, see below) to share the benefit of certain corporation tax losses. One member of the group can surrender these losses to another member of the group, which can deduct the loss from its total profits, thus reducing the amount of corporation tax payable.

Group relief allows one group company to surrender its current year losses and/or carried-forward losses to other group members.

What makes a loss relief group?

A corporation tax loss relief group is formed if:

•
company B is a 75% subsidiary of company A, or
•
company A and company B are both 75% subsidiaries of company C

Company B is a 75% subsidiary of company A if:

•
A beneficially owns, directly or indirectly, 75% of the ordinary share capital of B
•
A is beneficially entitled to 75% of the profits available for distribution to equity holders of B (the profits test), and
•
A would be beneficially entitled to 75% of the assets available for distribution to equity

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Tax News

FTT upholds Sch 36 information notice (AAA Oriental Ltd v HMRC)

Tax analysis: In AAA Oriental Ltd, the First-tier Tax Tribunal (FTT) dismissed an appeal against an information notice issued by HMRC under FA 2008, Sch 36.

Court of Appeal furthers uncertainty over salaried members rules (Bluecrest v HMRC)

Tax analysis: The ongoing dispute between HMRC and Bluecrest Capital Management on the scope of the salaried members rules has been sent back to the First-tier Tax Tribunal (FTT) by the Court of Appeal. Any hope that the Court of Appeal could bring some clarity to proceedings was dashed as it held that both parties, the Upper Tribunal (UT), the FTT and HMRC's own published guidance were all wrong and the only recourse was for the FTT to effectively start again. The Court of Appeal held that only influence arising from the terms of the partnership itself, in effect the partnership agreement, was relevant and that practical or de facto influence seemingly does not matter at all. Since neither Tribunal had approached the question in this light hitherto, the Court directed that they now do so now. Written by Tom Rank, tax partner at DWF Law LLP.

Tax weekly highlights—30 January 2025

This week's edition of Tax weekly highlights includes: (1) HMRC’s announcement of a consultation on draft MTT and DTT supplementary guidance, (2) News Analysis of the FTT’s decision in Bryan Robson Limited that consideration attributable to the exploitation of image rights was outside the scope of IR35, and (3) News Analysis of the UT’s decision on EIS disqualifying arrangements in Hoopla Animation Ltd.

UK government launches review of HMRC loan charge

Law360, London: UK tax authority's loan charge targeting individuals who incurred hefty tax bills after signing up for disguised remuneration schemes, a move critics claim has unfairly hit tens of thousands of contractors.