Tx notes fa22 Final

Answer to Example 2 
Group relief
1.
Z plc will be able to group relieve its trading loss to e
ff
ective 75% subsidiaries. The 
shareholding can be held directly or indirectly.
2.
Z plc will therefore be able to group relieve its trading loss to A Ltd and B Ltd.
3.
Z plc does not have the required 75% shareholding in C Ltd (100% 
×
80% 
×
80% = 64%).
C Ltd may however separately group relieve with B Ltd its 80% parent. It is therefore possible 
that where sub - subsidiaries (indirect subsidiaries) exist there will be more than one group for 
purposes of group relief.
Answer to Example 3
 
1.
Group relief to B Ltd will be restricted to 6/12ths of Z plc’s trading loss for the year ended 31 
March 2023.
2.
The set–o
ff
will be against B Ltd’s Taxable Total Profits for the six–month period to 31 March 
2023.
£
Proceeds (May 2016)
350,000
Cost
(200,000)
150,000
I.A 
0.361 x 200,000
(72,200)
77,800

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Answer to Example 4 
Both Beyonce Ltd and Z Ltd prepare accounts to 31 March but as Z Ltd only commenced trading on 
1 January, 2023 only £60,000 (3/12 x 240,000) of Beyonce’s loss period corresponds with Z Ltd’s 
profit period. This, however will not be a problem as Z Ltd’s profit is only £50,000 and will therefore 
represent the maximum group relief available. 
J Ltd’s accounting period is not coterminous and therefore both its profits and Beyonce’s loss must 
be time apportioned between the corresponding periods:
3 months of Beyonce’s loss corresponds with 3 months of J’s profit for the year ended 30 June 
2022, hence maximum group relief in this period is lower of:
3/12 
×
(240,000) = (60,000)
3/12 
×
160,000 = 40,000
Maximum group relief is therefore £40,000.
9 months of Beyonce’s loss corresponds with 9 months of J’s profit for the year ended 30 June 
2023, hence group relief in this period is restricted to lower of:
9/12 
×
(240,000) = 180,000
9/12 
×
280,000 = 210,000
Maximum group relief is therefore £180,000