HD Ltd owns 80% of the ordinary share capital of SD Ltd. These shares were acquired during 1995. Both companies are UK resident for tax purposes and neither has any other associated companies. Their most recent results have been:

HD Ltd SD Ltd y/e 31/12/09 9 months to 31/3/10

£ £

INCOME Trading profit 890,000 -

Trading loss - (102,000)

Bank interest 6,000 4,000 Property income 2,000 8,000 Capital gains - 20,000 Capital losses brought forward (15,000) -

Dividend from SD Ltd 27,000 Dividends from UK companies 32,000 CHARGES PAID Gift Aid donations 4,000 5,000 DIVIDEND PAID 327,000 33,750 You are required:

(a) To compute the corporation tax payable by each company for the above accounting periods, assuming that maximum group relief is claimed by HD Ltd.

(b) To suggest a more tax-efficient way in which HD Ltd and SD Ltd might have dealt with the capital gains and losses shown above.