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Taking Villa example, just to know the structure and effective rates for qualifying 75%.
Villa is parent
A is sub 100%
– F is sub-sub 80%V is sub 90%
– C is sub-sub 80%Now if F makes loss of $100K. I can surrender it to A ( as it holds 80% of control ).
But If I surrender it to say “V”, will it be like this prcedure? ( 90% x 100% x 80% )?
Or if I surrender it to say “C”, will it be like this procedure? ( 80% x 100% x 90% x 80% )?
I am aware that how to deal with the desending like from main parent to its direct and indirect subs, But I am confused when it comes the time to check cross pairs of subs with other subs or sub-sub with other holding C.
Let me know the easiest wording answer, so it will be easy for me to understand precisely, without having to guess for your answer scripture 🙂
Many Thanks
In the lecture we clearly state which companies can group relieve – there are 2 groups for purposes of group relief:
– Villa, A, V, F – if any one of these companies makes a loss it may group relieve against the TTP of any other, and
– V & C – therefore C can only have group relief with V but V is able to group relieve with any of the group companies
For group relief we only look at the link from the parent company to the individual subsidiary company so the procedure you refer to above is incorrect
Villa owns 100% of A and has an effective 80% holding in F so these 3 companies are in the same group for purposes of group relief. Villa also owns 90% of V so V is also in the Villa group – we do not go 80% x 100% x 90% we are only interested in the relationship of the subsidiary company to the principal parent company, so long as that is an effective 75% they are in the same group for group relief. We do NOT do cross percentages down each arm of the group.
C is not of course in the main Villa group for group relief as 90% of 80% is only effective 72% thus failing the required 75%.
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