Question 1

Section B - Case 2: Aero-Dynamics Ltd

'Aero-Dynamics Ltd' is a UK resident company manufacturing commercial drones. It owns 100% of 'Hover-Tech Ltd' (UK resident) and 80% of 'Sky-Net Inc' (resident overseas). All companies prepare accounts to 31 March. For the year ended 31 March 2024, Aero-Dynamics Ltd has a trading loss of £400,000. Hover-Tech Ltd has taxable total profits (TTP) of £150,000. Sky-Net Inc has equivalent profits of £200,000.

Which companies form a Group Relief group for trading losses with Aero-Dynamics Ltd?

Accepted Answer

Identify the ownership percentages (must be >= 75%) and the residency status of the companies. Group relief is generally restricted to UK resident companies.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Including the overseas subsidiary in the UK group relief group.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 3

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