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F6 Taxation (UK) Lecture Note 95 4006-026-018 Prepared by Du Wei Chapter 17 Groups 1. Groups for loss relief 1.1 Requirement of groups for loss relief Each level at least 75% Effective holding at least 75% 1.2 Tax Effect of groups for loss relief Group relief enables companies within the group to set against losses to other companies’taxable total profits (after deducting qualifying charitable donation and on the assumption that a claim is made for current year trading loss) within the group. The losses that can be group relieved are: (1) Trading losses (2) Unrelieved property business losses (3) Unrelieved Qualifying Charitable Donation (4) Capital loss cannot be group relieved Only current year losses can be group relieved, so no relief is available for trading losses brought forward from previous years. Lecture Example 1 Lae Ltd owns 100% of the ordinary share capital of Mon Ltd. The results of each company for the year ended 31 March 2016 are as follows: Lae Ltd Mon Ltd £ £ Trading loss (18,100) (11,200) Property business profit/(loss) (26,700) 60,900 Loan interest received 1,600 3,300 Capital loss (19,200) 0 Qualifying charitable donations 4,800 3,200 All the loan interest received is in respect of loans that were made for non-trading purposes. (a) Advise Lae Ltd (surrendering company) as to the maximum amount of its losses that could be surrendered as group relief. (b) Advise Mon Ltd (claimant company) as to the maximum amount of group relief that it can claim for Lae Ltd in respect of its losses. 1.3 Corresponding accounting period If the accounting periods of the two companies do not match, the profits and losses must be time apportioned.
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