chargeable gain -Group

Yi Jilly,

Q2 TX-UK Practice Exam 2 – FA 2023

I am unable to understand why Eight LTD is not considered within Acasta Ltd’s chargeable gains group

if we takt 100% of 51% we get 51% so it is more than 50%

Thanks,

Question

Acasta Ltd owns 75% of the ordinary share capital of Barge Ltd and 100% of the ordinary share capital of Coracle Ltd. Barge Ltd owns 75% of the ordinary share capital of Dhow Ltd. Coracle Ltd owns 51% of the ordinary share capital of Eight Ltd.

Which companies, along with Coracle Ltd, are within Acasta Ltd’s chargeable gains group?

Answer

For a capital gains group there must be 75% direct ownership and >50% effective ownership, therefore only Acasta, Barge, Coracle and Dhow are included in the group. The solution is therefore Barge Ltd and Dhow Ltd only.

Acasta Ltd has a 75% interest in subsidiaries. Barge Ltd has a 75% interest in Dhow Ltd. Acasta Ltd has > 50% effective interest in Dhow Ltd.