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HMRC internal manual

Company Taxation Manual

Groups: group relief: applying the entitlement to profits/assets tests

The guidance in CTM80155 about the entitlement to profits/assets tests applies in principle to all relationships for group claims.  You will not normally need to examine in detail an uncomplicated group situation.  This is the situation where:

  • the subsidiary company has only one class of issued share capital which does not carry any unusual rights, and


  • any loans are clearly ‘normal commercial loans’see CTM81010).

Where you do need to make a detailed examination, you will usually have to refer to the documents regulating the company and its share capital. You will need to examine:

  • the Memorandum and Articles of Association,
  • special resolutions concerning alterations in share capital, and
  • documents relating to loans made to the company,

so that you can determine different equity holders’ entitlements to:

  • profits, or
  • assets in a winding-up.