life assets and enables HM Revenue & Customs to make sure that the taxpayer does not get the allowances more quickly in respect of expensive cars.
4Group Relief and Consortium Relief
4.1 It is very common for a holding company to have a number of subsidiaries; it may also have an interest in some sort of joint venture with another party.
4.2 The tax regime in the UK does not provide for a consolidated tax return to be filed. Rather, each company is a separate taxable entity and has an obligation to prepare tax computations based on its own accounts. 4.3 There is however a facility to allow losses and profits of the same accounting period to be offset within a 75% group. This can be shown by an example: Stonham Industries Limited has a wholly owned subsidiary undertaking, Thwaite Enterprises Limited. Thwaite Enterprises Limited has made a trading loss of £100,000. This is offset by group relief to reduce total profits in Stonham Industries Limited comprising a trading profit of £60,000, interest income of £10,000, rental income of £20,000 and a chargeable gain of £30,000. The total profits in Stonham Industries Limited are therefore reduced from £120,000 to £20,000. 4.4 If Thwaite Enterprises Limited was structurally loss-making it could group relieve its losses each year, provided that there were sufficient profits in its parent. To the extent that the losses were not group relieved in the year they would then become effectively stranded in Thwaite Enterprises Limited. They could be carried forward, but they could not be used in a group relief claim in a later year. 4.5 Consortium relief is available if several companies each have a stake of at least 5% and they own between them at least 75% of the share capital of the company in question. Consortium relief enables losses to be surrendered between the consortium company and its members. 4.6 Payments for group relief or consortium relief are not included in tax computations if the payments are between £nil and £1 for each £1 of losses surrendered. It is therefore possible for losses of £10,000 to be charged by the surrendering company at the commercial value of £2,800, or at any other figure between £nil and £10,000.
5Trading Losses
5.1 We have made the point that trading losses can be carried forward under the provisions of Section 393, ICTA to be offset against future profits arising from the same trade. These losses are then extinguished if the trade ceases. If the company commences trading at some stage after the cessation this will be treated as a new trade and not as the same trade, even if the activities are virtually identical.
5.2 Under the provisions of Section 393A, ICTA it is possible for the trading losses of a period to be set against the other profits and gains arising in the company in that same
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