BLM80545 - sale of lessor companies and similar arrangements: calculating the income amount: adjustments to the basic amount: company becomes a consortium company - example 1 of 2

Section 405 CTA2010

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In this example A Ltd is a 75% subsidiary of B Ltd. At stage 2 A Ltd is a consortium company and B Ltd is a member of the consortium. B Ltd has not relinquished the whole of its interest in A Ltd and this must be reflected in an adjustment to the basic amount.

»Ê¹ÚÌåÓýapp amount of the income is restricted to the appropriate percentage of the basic amount.

»Ê¹ÚÌåÓýapp appropriate percentage is found by subtracting the ‘ownership percentageâ€� at the end of the day from 100%.

»Ê¹ÚÌåÓýapp ownership percentage is the lesser of:

  • »Ê¹ÚÌåÓýapp percentage of the ordinary share capital of company A that is beneficially owned by company B;
  • »Ê¹ÚÌåÓýapp percentage to which company B is beneficially entitled of any profits available for distribution to equity holders of Company A;
  • »Ê¹ÚÌåÓýapp percentage to which company B would be beneficially entitled of any assets of Company A available for distribution to its equity holders on a winding up.

In this case let us assume the ownership percentage is 60% and the appropriate percentage is therefore 40%.