ACCA Advanced Taxation (ATX) Practice Exam

Is consortium relief available between both UK resident and non UK resident companies?

1. Yes, for both

2. No, only for UK resident companies

3. Yes, but subject to certain conditions

4. No, only for non UK resident companies

The correct answer is: No, only for UK resident companies

Consortium relief is a tax relief available in the UK that allows a group of companies to consolidate their tax relief claims on certain types of income, specifically to mitigate the tax burden of a group of companies working together. In the context of consortium relief, it is only available for UK resident companies. To qualify for consortium relief, companies must meet specific criteria, primarily centered around their residency status. UK tax legislation stipulates that only UK resident companies can claim and provide consortium relief to other UK resident companies within the group. Non-UK resident companies do not qualify for this relief since they are not subject to UK corporation tax in the same manner as UK resident entities. This residency requirement highlights the primary reason why consortium relief cannot be extended to non-UK resident companies. By understanding this framework, it becomes clear why consortium relief is only applicable to UK resident companies, thereby confirming that the answer stating this limitation is accurate and reflects the legal provisions within UK tax law.