Test your understanding: answers

(1). D Including Summer Ltd there are four associated companies, so Summer Ltd’s lower and upper corporation tax limits are reduced to £75,000 (300,000/4) and £375,000 (1,500,000/4) respectively.

(2). D Companies form a chargeable gains group if at each level in the group structure there is a 75% shareholding. Bat Ltd only owns 70% of the ordinary share capital of Club Ltd, so this company (along with Dense Ltd and Edgy Ltd) is not part of Axe Ltd’s chargeable gains group.

(3). B Group relief is restricted to a maximum of £84,000, being the lower of £84,000 and £99,000 (132,000 x 9/12).

(4). D It is not possible to surrender capital losses as part of a group relief claim.

(5). A The election has to be made within two years of the end of the accounting period in which the asset is disposed of outside the group.