Corporation Tax Act 2009 section 767

Principal company cannot be 75% subsidiary of another company

Section 767 establishes the general rule that a company which is itself a 75% subsidiary of another company cannot be the principal company of an intangible fixed assets group, and sets out a narrow exception to that rule.

• A company that is a 75% subsidiary of another company is generally prevented from being the principal company of a group for intangible fixed assets purposes.
• An exception applies where the two companies are prevented from being members of the same group because the subsidiary company is not an "effective 51% subsidiary" of the parent.
• For the exception to apply, the subsidiary company and its own subsidiaries must independently satisfy the requirements for forming a valid group.
• The exception cannot be used if it would create a chain effect allowing a further company higher up the structure to become the principal company of a group that includes the subsidiary company.