Group Taxation in United Kingdom

Basis of UK group taxation

In general, the same rules relating to corporation tax apply to groups of companies as to individual companies: each company is taxed separately and there is no consolidated tax treatment. However, there are specific provisions which apply solely to a recognised ‘group of companies’.

These specific provisions deal mainly with the following:

• dividends and other income payments between members;
• the surrender of ACT for offset by a subsidiary member;
• transfers of assets between members;
• replacement of business assets by group members;
• transfers to shareholders of shares in, or business of, subsidiary members on a demerger;
• the surrender of losses for offset by another member (group relief);
• the recovery from other members of the group of unpaid tax on chargeable gains;
• the surrender of a tax refund, etc. (including, under self assessment, repayments of instalments paid by large companies) within a group.

In order to understand these provisions it is necessary to diverge into a number of definitions in relation to the meaning of group.

Law: ICTA 1988, s. 247, 248, 402–413