Inland Revenue 41
                                                  17 March 1998
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        CORRECTION TO GROUP RELIEF RULES FOR CONSORTIUMS
                                
The Government confirmed today that a drafting error in the
group relief rules for consortiums will be corrected with
effect from 2 July 1997.  The change will ensure that the
rules work fairly, and as intended.


DETAILS

1.   The group relief rules enable companies to obtain relief
for trading and some other losses by surrendering those losses
to other companies in their groups.  The rules also cover
consortiums.  A consortium exists where at least 75 per cent
of a company's ordinary share capital is owned between them by
other companies none of which own less than 5 per cent of that
capital.

2.   The change involves an amendment to Section 403C of the
Income and Corporation Taxes Act 1988 (the Taxes Act), which
was inserted by Schedule 7 of  the Finance (No. 2) Act 1997. 
It switches round the references to "claimant company" and
"surrendering company" in subsections (1)(a) and (2)(a), and
makes consequential amendments.

3.   The effect of the change is to maintain the previous
limits on the amounts of group relief which may be claimed by
a consortium.  Those limits were contained in Section 403(9)
of the Taxes Act.

4.   The 2 July 1997 start date for the change will be the
same as for the current group relief rules for consortiums. 
It will substantially reduce the length and complexity of the
necessary legislation, which will be included in the Finance
Bill.


NOTES FOR EDITORS

1.   The change was announced in a press release, also called
"Correction to group relief rules for consortiums", on 22
August 1997.  It will correct the group relief rules for
consortiums that were included in the Finance (No 2) Act 1997. 
This will ensure that the relevant part of those rules works
in the same way as did its predecessor in earlier legislation.

2.   The Government said on 22 August 1997 that it was minded
to apply the change to accounting periods ending on or after 2
July 1997.  Any companies which  felt they would be adversely
affected by that start date for the change (as opposed  to 22
August 1997) were invited to write to the Inland Revenue by 31
December  1997.  None did so.

3.   The text of the change was contained in the 22 August
1997 press release  entitled "Correction to group relief rules
for consortiums". 


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