Group gains

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

  • Group gains
  • Implications for companies in a gains group
  • Definition of group for capital gains purposes
  • Illustration of capital gains group definition
  • Transfers of assets between group members
  • Degrouping charges
  • Election for deemed intra-group transfer
  • Group-wide rollover relief

This document covers these rules in detail, along with the surrenderable amounts; payments; overseas companies; effective use of losses; trapped losses; maximum relief; Non-coterminous periods; company joining/leaving a group; transfer arrangements; commercial arrangements with public authorities; accelerated payments; and group relief restriction.

 

Implications for companies in a gains group

The main implications of companies being grouped for capital gains purposes are:

  • transfers between group members are at no gain / no loss
  • degrouping charges may arise where there has been a previous no gain / no loss transfer and the transferee company leaves the group within six years
  • groups can elect for assets to be deemed to have been transferred on a no gain / no loss basis
  • rollover relief may be applied on a group-wide basis

There are similar rules relating to intangible fixed assets. There are also exemptions from both stamp duty and stamp duty land tax for transfers between group companies. Both of these sets of rules include provisions to claw back relief in certain circumstances.

Please note that changes were made to the corporate gains rules for groups of companies by Finance Act 2011 with effect from 19 July 2011. The measures introduced mainly aimed to simplify the tax treatment of chargeable gains for corporate groups, with changes to degrouping charges, SSE and the repeal of certain measures which were considered to be redundant.

See the Degrouping charges and How does SSE interact with other legislation? guidance notes for details of how the rules differ before and after 19 July 2011.

Definition of group for capital gains purposes

Companies are in the same capital gains group when one company owns at least 75% of the ordinary shares of another company or when two companies are 75% owned by the same parent.

TCGA 1992, s 170

This 75% definition is similar to the rules for group relief but for group gains purposes, 75% ownership relates to ordinary shares only and not

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