Consortium relief: extension of rules to allow EEA companies as link companies
Companies that are in the same group as a 'link company', which holds an interest in a consortium, may claim relief for a share of any consortium company losses.
Under the current rules, the 'link company' must be UK resident. In 2009, the First-tier Tribunal found that the 'link company' requirements constituted a restriction to the EU Freedom of Establishment principle.
Legislation is to be introduced which will extend the rules to allow EEA companies to be 'link companies'. This measure was previously announced at the 2009 Pre-Budget Report.
Who will be affected?
Companies which are members of corporate consortia.
Legislation is to be introduced in the Finance Bill as soon as possible after the summer recess. The changes to the legislation will have effect for accounting periods commencing on or after the date that the legislation is published.
The changes will widen the scope of consortium relief and are welcomed.