Question 1ii
Your manager has sent you a memorandum in relation to the Harrow Tan Ltd group. An extract from the memorandum and a schedule of group information prepared by Corella, the group finance director, are set out below.
Memorandum from your manager – dated 7 September 2017
Background
- All five group companies are UK resident trading companies which prepare accounts to 31 December each year.
Please prepare notes for us to use in a meeting with Corella, which EXPLAIN the following matters:
Schedule of group information – from Corella, the group finance director
(ii)Group relief – year ending 31 December 2017
– By reference to the information in part B of Corella’s schedule, the maximum amount of Seckel Ltd’s trading loss which can be surrendered to each of the other companies in the Harrow Tan Ltd group.
B: Budgeted results for the year ending 31 December 2017
| HarrowTan Ltd | Rocha Ltd | Seckel Ltd | Tosca Ltd | Uta Far Ltd | |
|---|---|---|---|---|---|
| £ | £ | £ | £ | £ | |
| Trading profit/(loss) | 40,000 | 60,000 | (180,000) | 70,000 | 600,000 |
| Chargeable gains | Note 1 | – | – | – | Note 2 |
Notes:
1. Disposal of shares in Rocha Ltd.
2. Uta Far Ltd sold a building used in its business on 1 May 2017 for £1,800,000. This resulted in a chargeable gain of £85,000.
Required: Prepare the meeting notes as requested by your manager.
The following marks are available:
(ii) Group relief – year ending 31 December 2017. (6 marks)