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CTA10/PART14/CHAPTER2B and CHAPTER2D

CHAPTER2B and CHAPTER2D apply in situations where a company, C, has changed ownership.  The change in ownership must take place on or after 1 April 2017.

Broadly, these chapters restrict relief for certain losses carried forward in situations where a chargeable gain is effectively trnsferred to company C from another company within the same chargeable gains group.

This could be because an asset has been transferred on a no gain/no loss or tax neutral basis and has subsequently been sold.  It could also be because companies have made an election to transfer a chargeable gain.

The restrictions only apply in situations where company C realises a gain on a transferred asset, or where a gain is transferred to company C.  Gains realised by other companies that have not changed ownership are not affected, even if the asset or gain in question is transferred from company C.

Gains are only affected if they arise within five years of the change in ownership.

The transfer itself must take place on or after the change in ownership, and no more than five years after the change.

The effect of the restrictions is to prevent company C from obtaining relief for certain carried-forward losses against profits that represent the transferred gain.  CTA10/PART14/CHAPTER2B and CHAPTER2D do not prevent relief against other profits that are unrelated to transferred assets or gains.  However, other restrictions following a change in ownership may apply.

CHAPTER2B restricts relief for trade losses carried forward.

CHAPTER2D restricts group relief for carried forward losses.

CTA10/PART14/CHAPTER4, introduced at an earlier date, restricts relief for other losses and amounts in circumstances involving the transfer of an asset.

Unlike CTA10/PART14/CHAPTER2A, which restricts the use of losses where there has been a major change in a company's business, CHAPTER2B and CHAPTER2D apply even if company C's business is unchanged.