Taxes Consolidation Act 1997 section 412

Qualification for entitlement to group relief

Section 412 sets out the additional conditions that must be satisfied before group relief or consortium relief is available, going beyond the basic share capital ownership tests.

• For group relief to apply, the parent company must hold at least 75% of the subsidiary's ordinary share capital and also be beneficially entitled to at least 75% of distributable profits and 75% of assets on a winding up.
• The same dual test applies for consortium relief, but at a 90% threshold in relation to the holding company's interest in any trading subsidiary surrendering losses.
• A consortium member's share is the lowest of its percentage interest in ordinary share capital, distributable profits, and winding-up assets; where percentages fluctuate over an accounting period, an average is used.
• These rules prevent abuse by blocking arrangements where nominal share holdings are used to claim relief while the real economic interest in the subsidiary lies with an unconnected party.

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