D2.251 Group relief—companies leaving a group where arrangements exist
Anti-avoidance provisions are in place which seek to deny group or consortium relief (for both current year and brought forward losses) where arrangements are in place which would result in one company ceasing to be a member of a group at some point in the future1. The most common scenario is where there are arrangements for the sale of shares of a group company to a third party purchaser. Broadly, the anti-avoidance rules can result in the use of group relief being lost some time in advance of the date that the share purchase agreement is signed if arrangements for the sale are substantially concluded on a commercial level before that date.
Under the rules, no group relief will be available from the date the arrangements exist2. Where the arrangements take place part way through an accounting period, it is split into two notional periods.
It is understood that HMRC do not seek to apply these provisions where there are arrangements which involve a change in the direct control of a company but do not involve a change in the ultimate holding company, ie where there is a group reorganisation but the relevant company does not move outside the original group.
Special rules apply to arrangements which form part of the documents regulating to a joint venture. The rules exempt such 'arrangements' from falling within the anti-avoidance provisions when those arrangements provide for the transfer