Part 2 of 4
This is the Finance Act 2020 version of this article. It is relevant for candidates sitting the ATX-UK exam in the period 1 June 2021 to 31 March 2022. Candidates sitting ATX-UK after 31 March 2022 should refer to the Finance Act 2021 version of this article (to be published on the ACCA website in 2022).
In Part 1 of this article we reviewed the definitions of a group relief group and a capital gains group.
The remaining parts of this article examine the tax planning issues relating to group relief groups. This part looks at companies which are resident overseas and how to plan the distribution of losses to members of a group. Throughout this review of tax planning issues, the term ‘losses’ will be used to represent any/all tax attributes that can be surrendered via group relief.
Companies resident overseas
Companies resident overseas are included within a group relief group. However, losses can only be surrendered between companies that are resident in the UK or are resident overseas but have a permanent establishment in the UK. If the H Ltd group were owned by H Co rather than H Ltd, as set out below (where H Co is a company resident and trading outside the UK and the European Union), the members of the group relief groups would not change. However, losses could only be surrendered between A Ltd and C Ltd and between A Ltd and B Ltd.
Figure 1: The structure of the H Co group of companies