Introduction Equity holders Overview Section 148: Conditions 1 and 2: surrendering company in group of companies
580.This section treats the company owned by a consortium and any companies in its group as a single company for the purposes of surrenders by companies in the group. It is based on sections 405 and 406 of ICTA. The rule about companies in the same group as the consortium member is in section 146.
581.Subsection (1) applies the section to consortium condition 1: that is, a case that does not involve a link company.
582.Subsection (2) extends the section to consortium condition 2: that is, cases involving a link company (L) where the surrendering company (S) is owned by a consortium (or is a member of the same group as the company owned by the consortium).
583.Subsections (3) and (4) restrict the relief available to any excess of the surrenderable amounts over the “group’s potential relief”.
584.Subsection (5) sets out how to calculate the “group’s potential relief”. This is the amount of profits that could be covered by all the available losses etc within the group. As section 147(3) makes clear, within the individual companies in the group, trading losses are treated as set off first against other profits.
585.If the consortium company C and its subsidiary S have different accounting dates, it may be necessary to apportion a loss to the surrender period in determining the “group’s potential relief”. See Change 25 in Annex 1.
586.Subsection (6) clarifies the basis on which the group relief claims are assumed to be made within the group.