Section B - Case 2: Aero-Dynamics Ltd
'Aero-Dynamics Ltd' is a UK resident company manufacturing commercial drones. It owns 100% of 'Hover-Tech Ltd' (UK resident) and 80% of 'Sky-Net Inc' (resident overseas). All companies prepare accounts to 31 March. For the year ended 31 March 2024, Aero-Dynamics Ltd has a trading loss of £400,000. Hover-Tech Ltd has taxable total profits (TTP) of £150,000. Sky-Net Inc has equivalent profits of £200,000.
Which companies form a Group Relief group for trading losses with Aero-Dynamics Ltd?
ACCA · Question 23 · Corporation tax liabilities
Section B - Case 2: Aero-Dynamics Ltd
'Aero-Dynamics Ltd' is a UK resident company manufacturing commercial drones. It owns 100% of 'Hover-Tech Ltd' (UK resident) and 80% of 'Sky-Net Inc' (resident overseas). All companies prepare accounts to 31 March. For the year ended 31 March 2024, Aero-Dynamics Ltd has a trading loss of £400,000. Hover-Tech Ltd has taxable total profits (TTP) of £150,000. Sky-Net Inc has equivalent profits of £200,000.
Aero-Dynamics Ltd is considering selling its 80% shareholding in Sky-Net Inc. It has held these shares for 3 years. Sky-Net Inc is a trading company.
Will the gain on the sale of these shares be exempt under the Substantial Shareholding Exemption (SSE)?
Answer options:
No, because Sky-Net Inc is an overseas company.
No, because Aero-Dynamics Ltd does not own 100% of the shares.
Yes, because Aero-Dynamics Ltd holds at least 10% of the shares for a continuous 12-month period, and the subsidiary is a trading company.
Yes, but only if the proceeds are reinvested in another trading asset.
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