CTM80450 | Groups: group relief: example - surrender of excess qualifying charitable donations

In the year ended 31 December 2012 Company R is a 75% subsidiary of Company G, which is a group holding company. Both companies make up their accounts to 31 December. The accounts and computations of the companies for the 12 months accounting period to 31 December 2012 show the following.

Company R claims group relief from Company G, with the consent of Company G. Group relief is limited to the smaller of:

• Company G’s excess of qualifying charitable donations (the only ‘relevant amounts’) over the ‘gross profits’ for the accounting period (CTM80142 – note this is a period ending before 20 March 2013), and

• Company R’s ‘available total profits’ as reduced by other reliefs under CTA10/S137 (CTM80400).

Company G’s excess of qualifying charitable donations over the gross profits for the accounting period is £1,000. Under CTA10/S105(5) the total profits are calculated without taking into account losses of any other period. Normally then, for this purpose, the chargeable gains of £800 would not be reduced by the £800 capital losses brought forward. Following MEPC Holdings Limited v. Taylor, however, capital losses are not losses or allowances of any other period, so will be taken into account for calculating G’s surrenderable amounts (see the closing paragraphs of CTM80142).

Calculation of Company G’s excess qualifying charitable donations:

Company R’s total profit as reduced by other reliefs is £1,300, calculated as follows.

So the group relief is limited to the smaller of £1,000 and £1,300, that is £1,000.

The CT computations for the accounting period to 31 December 2012 are as follows.

Company G’s carry forward position at 31 December 2012