Taxation of Chargeable Gains Act 1992 section 170

Interpretation of sections 171 to 181

Section 170 defines what constitutes a "group" of companies for capital gains tax purposes and sets out the rules for determining group membership and the identity of the principal company.

• A capital gains group consists of a principal company and all its 75% subsidiaries (and their 75% subsidiaries, and so on), provided each subsidiary is also an "effective 51% subsidiary" of the principal company — meaning the principal company must be entitled to more than 50% of both the subsidiary's distributable profits and its assets on a winding-up.
• A company cannot be the principal company of a group if it is itself a 75% subsidiary of another company, and no company can belong to more than one group — with a series of four tiebreaker tests applied where dual membership would otherwise arise.
• A group retains its identity so long as the same principal company remains at the top; if one group's principal company is taken over by another group, the two groups are treated as the same group, and the commencement of winding-up of a group member does not break group relationships.
• For these purposes, "company" is defined to include Companies Act companies, companies formed under other UK legislation or Royal Charter, companies formed overseas, registered societies, incorporated friendly societies, and building societies — but not limited liability partnerships.