Group relief - what profits to use.......

Group relief - what profits to use.......

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2 group companies

Parent has 14 month period to December 2014 (14 month profts £100k including dividend income of £15k received 31 December 2014)

Sub has 12 month period to December 2014 (loss available to group relieve is £40000)

My question is, when calculating the max profits against which group relief can be claimed in the parent, is it correct to use the different tax adjusted proftits for the 12 months to 31 October 2014 and then 2 months to Dec 2014 or do I use 12/14 x profits for whole period and 2/12 x profit for whole period?

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By User deleted
08th Apr 2015 11:10

Overlapping period

The loss for the 12-month period to 31 December 2014 is surrendered against profits for the same 12-month period. So you need to work out the available profits for that 12-month period. Depending on the source(s) of those profits it may be a straight 12/14 apportionment, or it may be something else.

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By Newbee Learner
08th Apr 2015 11:26

Thank you

Am I correct in saying that the dividend income in the parent is adjusted for in the second period i.e. in the period it was received, or is it adjusted pro rata over the full 14 months?

 

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Portia profile image
By Portia Nina Levin
25th Apr 2015 11:02

(No subject)

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By Newbee Learner
08th Apr 2015 11:43

Ureka!

Thank you Portia,

Your comment about ignoring the dividend has solved my confusion (bad day being had). I had entered the accounting profits into our software after dividends - so if I simply "disallow" the dividend income as it is not taxable and tick the "apportion over whole period" box, I have the correct starting point . I was confusing myself buy "disallowing" the divided in come in the parent comps in the last 2 months and hence my question.

Hope that makes sense!

 

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Portia profile image
By Portia Nina Levin
25th Apr 2015 11:03

(No subject)

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By Newbee Learner
08th Apr 2015 11:50

Told you.....

A bad day :-))

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By User deleted
08th Apr 2015 12:08

You're right, Portia

In my haste, I over-simplified.

 If nothing more than time-apportionment is required then you have 10/14ths plus 2/14ths = 12/14ths.Youreeka.

Or it could be something else.

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