CTM06865 - Corporation Tax: loss buying: transfer of trade: subsequent transfers of the trade

CTA10/S676ED

S676ED ensures that the restrictions under CTA10/PART14/CHAPTER2E continue to apply in situations where a trade is transferred through several companies.

If

  • there is a change in the ownership of a company (company C),
  • company C or a co-transferred company transfers a trade, T, to another company, company Y, and
  • company Y transfers trade T to another company, company Z

then, for the purposes of CHAPTER2E, there is a deemed transfer from company C, or from the co-transferred company, to company Z.聽 This deemed transfer is treated as taking place on the date of the聽 transfer from company Y to company Z.

In addition, if CTA10/PART22/CHAPTER1 applies to the second transfer, from company Y to company Z, then CHAPTER2E operates as if CTA10/PART22/CHAPTER1applied to the deemed transfer also.

This means that the deemed transfer will meet one of the conditions for the restrictions in CTA10/PART14/CHAPTER2E to apply. The actual relationship between company C and company Z does not matter.

If the other conditions of CHAPTER2E are met, company Z's ability to relieve or surrender losses of the transferred trade will be restricted in accordance with CTA10/S676EB to S676EC.

The deemed transfer creates the conditions for the same rules to apply again for any subsequent transfers of the trade.

Composite trades

In certain circumstances, the transferred trade might be combined with another trade before a subsequent transfer.聽 If

  • there is a change in ownership of a company, company C,
  • company C transfers a trade, T, to another company, company Y,
  • company Y includes the activities of trade T in the activities of another trade (the composite trade), and
  • company Y subsequently transfers the composite trade to another company, company Z

then the composite trade is treated in the same way as trade T in the first example above.

There is still a deemed transfer between company C and company Z on the date of the first transfer, between company Y and company Z.

If CTA10/PART22/CHAPTER1 applied to the second transfer, between company Y and company Z, then CTA10/PART14/CHAPTER2E will operate as if it applied to the deemed transfer.