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Companies joining or leaving group or consortium.
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119.—(1) Subject to the following provisions of this section, group relief shall be given if, and only if, the surrendering company and the claimant company are members of the same group, or fulfil the conditions for relief for a consortium, throughout the whole of the surrendering company's accounting period to which the claim relates, and throughout the whole of the corresponding accounting period of the claimant company.
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(2) Where on any occasion two companies become or cease to be members of the same group, then for the purposes specified in subsection (3) it shall be assumed as respects each company that on that occasion (unless a true accounting period of the company begins or ends then) an accounting period of the company ends, and a new one begins, the new accounting period to end with the end of the true accounting period (unless before then there is a further break under this subsection) and—
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(a) that the losses or other amounts of the true accounting period are apportioned to the component accounting periods on a time basis according to their lengths, and
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(b) that the amount of total profits for the true accounting period of the company against which group relief may be allowed in accordance with section 117 (1) is also so apportioned to the component accounting periods.
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(3) Where the one company is the surrendering company and the other company is the claimant company—
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(a) references to accounting periods, to profits, and to losses, allowances, expenses of management or charges on income of the surrendering company, in section 116 shall be construed in accordance with subsection (2),
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(b) references to accounting periods in section 118 and subsection (1) of this section shall be so construed (so that if the two companies are members of the same group in the surrendering company's accounting period they must under section 118 also be members of the same group in any corresponding accounting period of the claimant company),
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(c) references to profits, and amounts to be set off against the profits, in section 118 shall be so construed (so that an amount apportioned under subsection (2) to a component accounting period may fall to be reduced under section 118 (2)).
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(4) Subsections (2) and (3) shall apply with the necessary modifications where a company begins or ceases to fulfil the conditions for relief for a consortium, either as a surrendering company or as a claimant company, as it applies where two companies become or cease to be members of the same group.
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