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HMRC internal manual

Company Taxation Manual

Groups: group relief: contingent arrangements


The point at which an arrangement for the purposes of CTA10/S154 comes into effect was explored in the Special Commissioners case Scottish and Universal Newspapers Ltd v Fisher (Inspector of Taxes) [1996] STC (SCD) 311.

The “arrangements” were outside the control of the parties, because some elements were void under European law until clearance from the Commission had been obtained, and because they required the consent of the Office of Fair Trading.  It was held that the “arrangements” would not be caught by ICTA88/S410 (the precursor to CTA10/S154) until such time as the necessary approvals were given.

Although the case is not legally binding precedent, HMRC accept that any genuine requirement for external approval before a transaction can proceed will prevent the existence of arrangements until the approval is given (or until it is clear that it will be given).  This is because the need for external approval means that the arrangements are not of themselves something by virtue of which one of the circumstances in S154 Effects 1 to 3 could happen.  ‘By virtue of which’ means that the existence of the arrangements is a sufficient, as well as a necessary, condition for the S154 circumstance.  If the transaction requires external approval, the conditions can only be met “by virtue of” the arrangements and the approval.