Corporation Tax Act 2009 section 796

Interpretation of section 795

Section 796 provides the definitions and interpretative rules needed to apply section 795, which deals with recovering a degrouping charge from another group company or a controlling director.

• The corporation tax attributable to a degrouping charge is the difference between the actual tax payable for the relevant accounting period and the tax that would have been payable without the degrouping charge.
• A degrouping charge is a taxable credit arising when a company leaves a group or when the principal company joins another group, or where such a charge has been reallocated within the group by election.
• For recovery purposes, the definitions of "group" and "principal company" use a wider 51% subsidiary test rather than the usual 75% threshold, broadening the range of companies from which unpaid tax may be recovered.
• A "controlling director" is a director who has control of the company, with "control" determined under the close company rules, and "director" is given its broad statutory meaning including shadow directors and similar persons.