June 2023 to March 2024 exams Watch free ACCA TX lectures
Example 4 Beyonce Ltd prepares its accounts to 31 March in each year and has two wholly owned subsidiaries
J Ltd and Z Ltd. J Ltd has been owned for several years but prepares its accounts to 30 June, while
Z Ltd started trading on 1 January 2023 and made a trading profit of £50,000 in its 3 month period to
31 March 2023.
Beyonce made a trading loss of £240,000 in the year ended 31 March 2023.
J Ltd has Taxable Total Profits of £160,000 for the year ended 30 June 2022 and £280,000 for the
year ended 30 June 2023.
Compute the maximum group relief claims available to J Ltd and Z Ltd in respect of Beyonce’s loss of £240,000. 5. Groups – Chargeable gains 5.1. Definition of a 75 % group (a)
A group consists of a parent company and its 75% subsidiaries, and also the 75% subsidiaries
of their subsidiaries.
(b)
The parent company need only have an e
ff
ective interest of over 50% in any sub-subsidiary
companies.
(c)
Groups may be established through a parent company resident anywhere in the world.
5.2. The Tax Implications (a)
Group companies will transfer assets between themselves without incurring a chargeable gain
or allowable loss. This will be a no gain / no loss transfer and will be deemed to take place at a
value equal to the cost of the asset to the transferor company plus the available indexation
allowance - remember that indexation allowance runs only to December 2018 at latest.
(b)
Group companies can make an election such that any part of a capital gain or loss incurred by
one company may be treated as arising in another company.
(c)
Members of a 75% group are treated as one for the purposes of roll over relief.
Where:
‣
one company sells a qualifying asset, and
‣
another company buys a qualifying asset within the rollover relief qualifying time period.
‣
the gain can be rolled over
