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Application of no gain/loss in group co accounts

Entries needed for property transfer to HoldCo where revalued previously and TCGA92/S171 applies

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I'm probably overthinking this, but a subsidiary hives up a property to its 100% holding company at market value via a dividend in specie.

The property was already revalued in the subsidiary to market value so there's a revaluation reserve and deferred tax liability.

The disposal from the sub is treated as a disposal at MV with the dividend to account for it, so the deferred tax and revaluation reserve will unwind. The P&L "gain" will be added back in the CT600 computation. However for the purposes of the CT600, is the no gain/loss transfer to group companies automatic, or do I need to declare the gain in the computation but claim relief specifically? In IRIS I can't see a relief box for it.

Then in the holding company, there is dividend income and a property of the same value, accounted for at market value but for tax purposes held at a lower base cost. Presumably then it would be correct to bring in a deferred tax liability and a corresponding tax charge in the year to reflect that this is due? 

Sorry - not an everyday occurrance in this practitioner's life so just checking I've not missed something. Thanks for reading.


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By hpflair
13th May 2021 14:17

Thanks for setting out the facts clearly.

There is no entry required on the CT600, because relief is automatic if the conditions of S.171 are met. It is advisable though to add a note detailing the transaction. I confirmed this with the tax advice line I use.

It is correct to reflect the deferred tax liability in the accounts of the holding company.

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