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Our client B Ltd is the trading subsidiary of a parent trading holding company A Ltd.
B Ltd has recently entered into insolvent liquidation and it was our understanding that a subsidiary company could then no longer surrender losses under group relief to the going concern parent company.
However only the subsidiary company loses beneficial ownership of its assets and the parent A Ltd does not lose beneficial ownership of its assets i.e. the shares in B Ltd.
Consequently would this restriction then only apply to losses surrendered to B Ltd’s own sub-group subsidiaries if there were any rather than to losses surrendered to its parent?
The test for group relief is not ‘control’ (and it is likely that a parent has lost control of an insolvent subsidiary in liquidation) but ‘beneficial entitlement to ... any profits...
