CTM80195 | Groups: group relief: date of arrangements

CTA10/S154

CTA10/S154 requires taking account of arrangements which take effect “at some time during or after the current period”. Following the decision in Shepherd v Law Land plc 63TC692 a group relationship, which would otherwise exist, is only broken while the arrangements are in existence. A group relationship is not broken, as had previously been thought, for the whole of any accounting period in which arrangements existed at any time.

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The apportionment rules of CTA10/S138 (CTM80210) apply where necessary, for example when arrangements:

• come into existence, so that the transferred company leaves the old group,

• are given effect to, so that the transferred company becomes a member of a new group, under its control.

Example

Company A owns all the ordinary share capital of Company B. Entitlements to profits and assets reflect ordinary share ownership. On 31 January 2012 Company A and Company C agree terms for the transfer of the shares in Company B to Company C, subject to contract. On 29 February 2012 Company A and Company B sign and complete an unconditional contract.

Arrangements come into existence on 31 January 2012, CTA10 /S154 applies and Company A and Company B cease to be members of the same group after that date. An overlapping period (for group relief purposes) comes to an end on 31 January 2012 (CTM80225). Company C acquires beneficial ownership on 1 March 2012, following the date of contract. See CTM06030 and J Sainsbury plc v O’Connor 64TC208 in relation to the meaning of beneficial ownership.