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TCGA92/S171 allows one company in a group to transfer an asset to another company in the same group on a no gain/no loss basis. By virtue of Section 170 a group is confined to companies which are United Kingdom resident. If a non-resident company owns a United Kingdom company directly and the United Kingdom company itself owns another United Kingdom company, then the two United Kingdom companies (but not the non-resident company) will comprise a group for the purposes of Section 171.

However, two United Kingdom companies each of which is directly owned by a non-resident company are not, and do not form part of, a group for the purposes of Section 171. »Ê¹ÚÌåÓýapp non- discrimination Article in a double taxation agreement does not require two United Kingdom companies in this position to be regarded as a group for the purposes of Section 171. »Ê¹ÚÌåÓýapp companies should be compared not with two United Kingdom companies owned by another United Kingdom company but with two United Kingdom companies owned by a company resident in a third country. Since no United Kingdom subsidiaries of a non-resident company can be a group for the purposes of Section 171 it is not discriminatory to deny group status to two United Kingdom companies owned by a company in the particular country which is a party to the agreement concerned.