Question of control

Shareholders’ control after receivers appointed

The taxpayers were each at least 75% subsidiaries of Kelucia as was Piccadilly Hotels 2. HMRC had disallowed the taxpayers’ claims for group relief of £10.5m under CTA 2010 s 154 for losses surrendered by Piccadilly Hotels 2. This was because it had ceased to be a member of the same group of companies as the taxpayers when receivers were appointed. The receiver was appointed by the Bank of Scotland which had been made a security trustee under a deed of debenture.

The First-tier Tribunal agreed with HMRC that the appointment of the receivers had the effect of degrouping Piccadilly Hotels 2 and the taxpayers. So the appeal progressed to the Upper Tribunal.

The Upper Tribunal said the starting point was that the shareholders of Kelucia’s ultimate holding company must be regarded as initially having control of both the taxpayers and Piccadilly Hotels...