Group companies

Produced by Tolley

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

  • Group companies
  • Mergers
  • EU Mergers Directive
  • Caution ― change of ownership restrictions
  • Liquidations
  • Offsetting losses
  • Trading losses
  • Capital losses
  • Claiming group relief
  • Group payment arrangements

Group companies

This guidance note is intended to cover the main strategies that a group of companies should consider in advance of the year end. The strategies outlined are aimed at reducing the group’s overall liability to corporation tax and other costs by:

  1. ensuring that losses within a group are relieved as quickly as possible

  2. reducing the compliance burden on the group overall, resulting in both time and cost savings

This note should be read in conjunction with the following notes:

  1. Introduction to year-end tax planning

  2. Chargeable gains planning

  3. Year end tax planning ― international issues

See also Checklist ― year-end tax planning for businesses for more information.

For the definition of a group company, see the definition of group for group relief purposes in the Group relief guidance note.


Subject to commercial and legal considerations, large groups of companies should consider whether a reduction in the number of distinct corporate entities would reduce professional, legal and other costs without interfering with operational efficiency.

Merging corporate entities to form a single company or a smaller group of companies may reduce overall group overheads.

The most common way that a merger is achieved is by transferring the trade of one company to another company, leaving the first company dormant. The dormant company is then struck off the register.

For more information on the transfers of the trade and assets between 75% group members, see the Transfer of a trade guidance note.

See also the Reconstructions involving transfer of business guidance note.

For the VAT considerations of transferring a trade to a group member, see the TOGC ― other related issues guidance note.

EU Mergers Directive

The EU Mergers Directive 2009/133/EC facilitates tax neutrality in cases where the parts of the business that are being merged are incorporated in at least two different member states. It has been incorporated into UK legislation at TCGA 1992, ss 140C–140L.

Where the conditions are satisfied, any such transfers of assets connected with the transfer of trade may take place on

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