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.