Corporation tax – Groups and chargeable gains for ATX-UK – part 2: self-test

Test your understanding

(1). What are the circumstances that will result in a degrouping charge?

(2). Which of the following items of information are needed in order to calculate a degrouping charge?

• The sales proceeds of the company being sold
• The market value of the asset at the time of the no gain, no loss transfer
• The market value of the asset at the time the company leaves the gains group
• The RPI for the month of the no gain, no loss transfer (or for December 2017, if earlier)
• The RPI for the month when the company leaves the gains group (or for December 2017, if earlier)
• The RPI for the month when the asset was originally purchased by the gains group (if prior to December 2017)
• The price paid for the asset when it was originally purchased by the gains group

(3). In which of the following situations will there be a degrouping charge?

A  XU Ltd is the holding company of a large group of companies. It has owned 100% of the ordinary share capital of SK Ltd for many years. On 1 June 2021 XU Ltd sold 20% of the share capital of SK Ltd. XU Ltd sold a building to SK Ltd on 1 May 2017.
B  JX Ltd is the holding company of a large group of companies. It has owned 80% of the ordinary share capital of PJ Ltd for many years. On 1 January 2022 JX Ltd sold 15% of the share capital of PJ Ltd. JX Ltd sold a building to PJ Ltd on 1 August 2014.

Answers