ACCA Advanced Taxation (ATX) Practice Exam

Is group rollover relief available solely for UK resident companies?

1. Yes, it is restricted to only UK resident companies

2. No, it can include non-UK resident companies

3. Only for UK companies with foreign assets

4. Yes, but only under specific conditions

The correct answer is: No, it can include non-UK resident companies

Group rollover relief is a form of tax relief that allows UK resident companies to defer taxation on gains arising from the disposal of assets when those assets are transferred between group companies. While it is commonly associated with UK companies, the provisions governing group rollover relief also extend to non-UK resident companies, provided they are part of a group that includes UK resident companies involved in the same economic activity. This means that if a non-UK resident company has a subsidiary, parent, or associated company that is UK resident, it can also benefit from group rollover relief under certain circumstances. This flexibility is particularly important in multinational corporate structures where transactions between different jurisdictions can occur, and assists in promoting economic activities by deferring tax liabilities. The other options do not accurately capture the wider applicability of group rollover relief. Restricting it solely to UK resident companies or suggesting that it is only available for UK companies with foreign assets overlooks the provisions that allow non-UK resident companies to participate under specific scenarios. Thus, the correct understanding of group rollover relief is that it can indeed include non-UK resident companies as long as they are adequately connected to a UK tax resident group structure.