Corporation Tax Act 2010 section 1047

Meaning of "group" and "51% subsidiary" in sections 1033 to 1047

Section 1047 defines what "group" and "51% subsidiary" mean for the purposes of the rules on purchase by a company of its own shares, and extends these definitions to catch certain successor companies and arrangements designed to circumvent the rules.

• A "group" means a top-level company (not itself a 51% subsidiary of another company) together with all of its 51% subsidiaries — but this definition does not apply to the separate expression "trading group"
• Where an unquoted successor company has taken over the whole or a significant part of a business previously carried on by the purchasing company or a member of its group, that successor company (and any company of which it is a 51% subsidiary) is treated as belonging to the same group as the purchasing company
• The successor company rule does not apply if the successor company first carried on the business in question more than three years before the share purchase took place
• A company that has ceased to be a 51% subsidiary before the purchase is still treated as a 51% subsidiary if arrangements exist at the time of the purchase under which it could become one again

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