Taxes Consolidation Act 1997 section 616

Groups of companies: interpretation

Section 616 sets out the rules of interpretation that apply for the purposes of the chargeable gains group provisions in Part 20 Chapter 1.

• A chargeable gains group consists of a principal company and its effective 75% subsidiaries, each of which must be resident for tax purposes in a relevant Member State (an EU or EEA State, including the United Kingdom).
• A company is an effective 75% subsidiary if the parent owns at least 75% of its ordinary share capital, is entitled to at least 75% of its distributable profits, and would receive at least 75% of its assets on a winding up.
• A company does not cease to be a member of a group merely because the principal company is taken over by another company, is transformed into an SE or SCE, or goes into liquidation.
• On a part disposal of an asset within a group, deductible expenditure must be apportioned before the no gain/no loss rule is applied, and the close company rule adjusting the cost of shares on undervalue transfers does not apply to intra-group transfers.