CTM81610 - Groups: group relief: surrendering company not UK resident: examples: the precedence condition

The precedence condition denies relief for a loss of a non-UK company if relief could be obtained in the territory of residence of an intermediate company in the ownership chain.

Only losses which cannot be relieved in the territory of residence of any intermediate company in an ownership chain between a surrendering company and the UK resident company of which it is a 75% subsidiary will satisfy the precedence condition.

The examples below identify situations where the precedence condition would apply to prevent a claim for relief.

Example 1

Company 1 in State A is an intermediate company between a UK parent and the surrendering company, but it is not in the ownership chain between the surrendering company and the nearest UK company (Y) of which the surrendering company is a 75% subsidiary.

Company 2 in State B is an intermediate company that is in the ownership chain between the surrendering company and the nearest UK company (Y) of which the surrendering company is a75% subsidiary.

So, in this example, the precedence condition prevents a claim for relief under the newrules to the extent that relief can be given in State B.

Example 2

Companies 1 & 3 (in States A & B) are not intermediate companies.

Company 2 (in State B) is an intermediate company that is in the ownership chain between the surrendering company and the nearest UK company (X) of which the surrendering company is a 75% subsidiary.

So, the precedence condition prevents a claim for relief under the new rules to the extent that relief can be given in State B (including, for example, where relief can be given to Company 3 in State B).

Example 3

Company 1 in State A is an intermediate company that is in the ownership chain between the surrendering company and the nearest UK company (Y) of which the surrendering company is a 75% subsidiary.

Company 2 in State B is an intermediate company between a UK parent and the surrendering company, but is not in the ownership chain between the surrendering company and the nearest UK company (Y) of which the surrendering company is a 75% subsidiary.

So, in this example, the precedence condition prevents a claim for relief under the new rules to the extent that relief can be given in State A.