Consortium relief

By Tolley
Corporation_tax_img5

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Consortium relief
  • Introduction
  • Definition
  • Available amounts
  • Deemed current year claim
  • Interaction with group relief
  • Group consortium companies
  • Group relief claims made
  • Consortium holding companies
  • Link companies

Introduction

Consortium relief enables losses of a consortium company to be transferred to consortium members in proportion to the consortium member’s interest in the consortium company, and vice versa. Consortium relief is a flexible relief which is available in several different scenarios which are discussed further below.

CTA 2010, s 130

Prior to 1 April 2017 consortium relief was only available for current year losses. For losses arising after 1 April 2017 these rules have been relaxed and when post 1 April 2017 losses are carried forward most can be surrendered as consortium relief. These rules are similar to the consortium relief rules for current year losses set out below but there are several conditions and anti-avoidance provisions. For further details see the Consortium relief for carried-forward losses post 1 April 2017 guidance note.

Definition

A 'consortium company’ is a company, which is 75% owned by consortium members.

CTA 2010, s 153

Consortium members are companies which own at least 5% of the consortium company.

Overseas companies are included when deciding whether there is a consortium relationship although they cannot receive or surrender losses for consortium relief.

Note that the amendments to the group relief rules as a result of the Marks & Spencer’s case do not apply to consortium relief ― see the Group loss relief and the Setting up overseas ― branch or subsidiary guidance notes for more commentary on loss relief for overseas subsidiaries.

Illustration 1 ― consortium relationships

Victoria Ltd is a consortium company, as 81% of its shares are owned by other companies who each own at least 5%.
Brooklyn Ltd is a consortium member because it owns at least 5%.

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