One of the fundamental areas in corporation tax is 75% groups. Companies in a 75% loss group can give each other trading losses while companies in a 75% gains group can transfer capital gains or capital losses.

Group 1 is a simple 75% group -all 3 companies can give each other trading losses or gains /losses.

Group 2 is more technical as Company A owns 75% in an intermediary Company B that owns 75% in Company C.

For trading loss groups, the effective or indirect shareholding must be 75% as well.  As A’s effective shareholding in C is only 56%, A and C cannot be in a loss group.

However, the same company, B, is permitted to be in more than one loss group.

This means that there are 2 75% loss groups: A and B in one group and B and C in a separate group.

For 75% gains groups, the effective or indirect shareholding only has to be 51%. As A’s effective shareholding in C is 56%, A and C can be in the same gains group.

This means that all 3 companies: A, B and C are in a single gains group.