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CV 2: Consolidated groups: income of company in group
or “How income is treated for companies in consolidated tax groups”
You could also call this:

“Rules for selling shares within a group of companies”

When you’re part of a group of companies that work together (called a consolidated group), there are special rules about selling shares. If one company in the group sells shares in another company in the group for less money than they should, there might be a reason for this.

If the company being sold (let’s call it Company A) has lost some of its value because its assets are worth less, the price of its shares might be lower. However, the government wants to make sure this isn’t done just to avoid paying taxes.

So, if this happens, the company selling the shares has to pretend they got more money for the shares. They have to report the amount of money they would have got if they had sold the shares to someone not in their group. This pretend money is counted as income for the company that sold the shares, and they have to report it when they do their taxes.

This rule is explained in more detail in section FM 23, which talks about arrangements for selling shares.

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Next up: CV 4: Amalgamated companies: amount derived after amalgamation

or “New company's income from old companies' actions after joining together”
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Part C Income
Income specific to certain entities

CV 3Consolidated groups: arrangement for disposal of shares

  1. This section applies for the purposes of section FM 23 (Arrangements for disposal of shares) when shares in company A that is part of a consolidated group are disposed of by another company for consideration that is less than would have been received in an arm’s length transaction because of a reduction in the value of company A’s assets.

  2. The amount that would have been received in an arm’s length transaction is treated as income derived by the other company at the time of disposal.

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