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HMRC internal manual

Company Taxation Manual

HM Revenue & Customs
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Shadow ACT: definition of parent and subsidiary companies

SI1999/358, Reg. 6 (1)

The definition of a group is based on the provisions in ICTA88/S240.

A group consists of:

  • a parent company resident in the UK, and
  • its 51% subsidiaries.

Parent company Reg. 6 (2)(a)

A company cannot be the parent company of a group if it is itself a 51% subsidiary of another company, and:

  • it has no 51% subsidiary, or
  • it and its 51% subsidiaries are all members of the same group.

The parent company is the top company within the group. While no other member can be the parent company of that group they may be the parent company of another group. That would happen where a company that was a member of a group had one or more 51% subsidiaries which were not also members of the group in which it was a 51% subsidiary.

51% subsidiary Reg. 6(2)(b)

A company is a 51% subsidiary if it is:

  • UK resident, and
  • a 51% subsidiary within the meaning of ICTA88/S838.