CTM80206 - Groups: group relief: examples of arrangements

CTA10/S154

Even though two companies otherwise satisfy the conditions for group relief at any time, the conditions are deemed not to be satisfied if certain 바카라 사이트˜arrangements바카라 사이트™ are in existence at that time(CTA/S154 (CTM80165)).

Example

This is an example of the type of arrangements to which CTA/S154 applies.

A loss-making company attaches one of its subsidiaries to a profitable group:

  • for long enough for that second group to benefit from the subsidiary바카라 사이트™s capital allowances on a major investment project,

but

  • with a prior arrangement or undertaking that the subsidiary will then revert to the original (and real) parent.

CTA10/S154 applies in every case where arrangements exist. There is no requirement for a purpose of the arrangements to include a tax advantage.

An arrangement would also include the uncomplicated case where there is a simple sale of a subsidiary (whether or not any avoidance motive is present), which results in the subsidiary:

  • leaving one group, and
  • joining another or coming under different control

Arrangements may be a matter of specific agreement or inherent in the capital structure of a company. Examples of inherent arrangements are where:

  • the majority of the voting rights in a company is held other than by the purported parent, or
  • where such majority control, though not at present so held, can be acquired through the exercise of conversion rights attaching to the company바카라 사이트™s loan or debenture stock.

See the judgement of Lord Bridge of Harwich in Pilkington Bros Ltd v CIR 55TC705 for the wide meaning given to the term 바카라 사이트˜arrangements바카라 사이트™ in this context.