Corporation tax – Group relief for Paper P6 (UK)

Test your understanding

(1). K Co and FG Ltd are 100% subsidiaries of Q Ltd. K Co is resident in Australia. FG Ltd is resident in the UK but carries on all of its trading activities in Mexico.

Explain whether or not Q Ltd is able to surrender group relief to either or both of these subsidiaries.

(2). P Ltd and Q Ltd are members of the WJ Ltd group. Their upper and lower limits are £187,500 and £37,500 respectively. Their taxable total profits are:

P Ltd – £195,000
Q Ltd – £47,000

There are trading losses available for surrender to these two companies of £30,000.

To which company should the trading losses be surrendered?

(3). RT Ltd has four associated companies. In the 10 months ended 31 January 2014 it has taxable total profits of £170,000.

What will be the reduction in its corporation tax liability if it receives group relief of £140,000?