Group Releif

What is the double entry in financial statements for group relief - when consideration is nil?

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Hello,

I have always entered group relief when the company pays the other company for using the losses. 

What is the double entry for group relief when there will not be any payment between the companies for the group relief?  In the company using the group losses is it just DR Balance Sheet Tax Liability, CR P&L Tax?  Does there need to be any disclosure in financial statements for the group relief?  Is there any entry or disclosure in the company surrendering the losses?

Many Thanks for your help in advance.

Replies (7)

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By johngroganjga
24th May 2024 11:38

If there is no payment for the losses surrendered there is no entry to make.

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Replying to johngroganjga:
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By David Ex
24th May 2024 14:12

johngroganjga wrote:

If there is no payment for the losses surrendered there is no entry to make.

Assuming no provision for CT was originally made?

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By Bells7788
24th May 2024 11:48

Thanks John, that makes sense. I think I had over thought that completely ! Say company A had taxable profits of £20K and company B had losses of £15K, group relief was used. You would just recognise £950 tax in company A, DR P&L £950 CR B/S Tax liability £950.

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By paul.benny
24th May 2024 11:56

Has the surrendering company booked a deferred tax asset in respect of the losses? If so, you'll have to reduce the asset by the amount of loss surrendered.

In the receiving company the group relief received will form part of the note reconciling the tax charge

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Replying to paul.benny:
By Ruddles
24th May 2024 12:20

paul.benny wrote:

In the receiving company the group relief received will form part of the note reconciling the tax charge


Assuming that there is such a note ;¬)
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Replying to Ruddles:
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By Bells7788
24th May 2024 14:23

Yes, I eventually worked out how to unsuppress it in the software! :)

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By Bells7788
24th May 2024 12:22

Thank You for your reply. Thank you for the point to consider on the deferred tax in surrendering company.

The accounts are prepared under FRS 102 Section 1A and you would not normally have the tax note disclosure reconciling the tax charge but I believe this is the extra disclosure I was looking for in this case to give a true and fair view and disclosure the group tax losses surrendered. Thank You for your help.

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