Tx notes fa22 Final

(2)
75% groups issues:
‣
group relief of losses
‣
gains group membership
2. Related 51% group companies
2.1.
 
Definition 
Companies are related 51% group companies if:
(a)
One company is a 51% subsidiary of the other or
(b)
They are 51% subsidiaries of another company
2.2. Control 
A company is a related 51% group company if the parent company owns directly or indirectly more 
than 50% of the share capital of the subsidiary company at the end of the previous accounting 
period:
Dormant companies are excluded but overseas companies are included.

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2.3. The tax implications 
As seen in Chapter 16 the profit limit of £1.5M used to determine if a company is large and is 
therefore required to make quarterly instalment payments is divided between the number of related 
51% group companies.
 
Example 1
 
 
A Ltd owns 100% of the share capital of V Ltd, F Ltd and C Ltd and has a Taxable Total Profit of 
£400,000. 
Is A Ltd a large company for purposes of making quarterly instalment payments? 
3. The Annual Investment (AIA) 
Only one AIA is available to a group of companies but the group members can allocate the AIA in 
any way it chooses across the group if the qualifying AIA expenditure is more than the AIA limit of 
£1M. 
A group, therefore, may choose to allocate the available AIA to firstly reduce the profits of large 
companies down to the relevant profit limit of the group company and as always to allocate to 
special rate pool expenditure before main pool expenditure albeit now most main pool expenditure 
will rank for the enhanced capital allowance of a 130% FYA.