CTM18480 - Shadow ACT: accounting periods to which the Regulations apply: group members: immediate opt out

There is provision for an immediate opt out which has to be made by the parent company on behalf of the group. The notification has to be made by the parent company in its first accounting period beginning on or after 6 April 1999. It must provide that the group will not seek or, as the case may be, cease to seek recovery of unrelieved surplus ACT in respect of any accounting period of any member of the group that begins on or after 6 April 1999. It is binding on each company that was a member of the group at 6 April 1999.

Where there is no immediate opt out, the Regulations will apply to all members of the group irrespective of whether they have unrelieved surplus ACT. The Regulations apply where a company had unrelieved surplus ACT at 6 April 1999. A company that had no unrelieved surplus ACT is treated as satisfying that requirement for any accounting period in which it is at any time a member of a group of which another company which is a member of that group at any time in that accounting period had unrelieved surplus ACT at 6 April 1999.

A group member will remain subject to the Regulations until after its ‘final accounting period’. That will be triggered either by the exhaustion of the unrelieved surplus ACT available for set off against the liability of a group member or as a consequence of the parent company notifying that the group will not seek recovery of any unrelieved surplus ACT in any subsequent accounting period.