Question 1

Section B: Case 3 - Meridian Logistics Plc

Scenario: Meridian Logistics Plc is the parent company of a cross-border shipping and warehousing group. Meridian Logistics Plc owns 80% of the ordinary share capital of Alpha Ltd. Alpha Ltd owns 90% of the ordinary share capital of Beta Ltd. Meridian Logistics Plc also directly owns 60% of Gamma Ltd. All companies are UK resident and prepare accounts to 31 March.

Question: Which of the companies form a Chargeable Gains group headed by Meridian Logistics Plc?

Accepted Answer

Apply the Chargeable Gains group definition: 75% direct ownership at each tier, AND the principal company must have an effective interest of more than 50% in the subsidiary.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing the >50% effective interest rule for gains groups with the 75% effective interest rule for group relief.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 1

More questions from this exam